TIDMLSE

RNS Number : 3051G

London Stock Exchange Group PLC

16 March 2020

London Stock Exchange Group plc Annual Report and Accounts, Notice of Annual General Meeting 2020, Corporate Sustainability Report, UK Gender Pay Gap Report and related documents.

The Annual Report and Accounts of London Stock Exchange Group plc (the "Group") for the year ended 31 December 2019 (the "Annual Report"), Notice of Annual General Meeting 2020 (the "AGM Notice") and related form of proxy for the Group's 2020 Annual General Meeting (the "AGM") are being mailed to shareholders today and, in accordance with paragraph 9.6.1 of the FCA Listing Rules, have been submitted to the National Storage Mechanism where they will shortly be available for inspection at http://www.morningstar.co.uk/uk/nsm .

London Stock Exchange Group has also published today its Corporate Sustainability Report 2019, which is available on https://www.lseg.com/about-london-stock-exchange-group/corporate-sustainability and its UK Gender Pay Gap Report 2019, which is available on https://www.lseg.com/about-london-stock-exchange-group/corporate-sustainability .

 
London Stock Exchange                                     +44 (0) 20 7797 
 Group plc              Paul Froud - Investor Relations    3322 
 Gavin Sullivan/Lucie Holloway                            +44 (0) 20 7797 
  - Media                                                  1222 
 

In compliance with DTR 6.3.5, the following information is extracted from the Annual Report and should be read in conjunction with the Group's preliminary results announcement of 28 February 2020 (the "Preliminary Results"). The information reproduced below and the Preliminary Results together constitute the material required by DTR 6.3.5 to be communicated in full, unedited text through a regulatory information service. This is not a substitute for reading the full Annual Report. Page numbers and cross references in the extracted information below refer to page numbers and cross-references in the Annual Report. The Annual Report, the Preliminary Results and the AGM Notice can be viewed and downloaded at http://www.lseg.com/investor-relations.

The Annual Report contains the following statements regarding important events that have occurred during the year on pages 4 to 5:

"Chairman's Statement

Overview

It was a great honour to be asked to serve as Chair of London Stock Exchange Group, an iconic institution with a 300-year history at the heart of global financial markets. I would like to extend my appreciation to the previous Chair for handing over the reins to a Group that is well positioned strategically and financially. The Group continues to perform well with total income up 8%, adjusted earnings per share up 15% and a proposed dividend of 70.0 pence per share, up 16%.

2019 has been characterised by macroeconomic and political uncertainty. The challenges posed to all business leaders throughout the year have been numerous, but LSEG remains well positioned with a set of highly complementary businesses across the capital markets lifecycle. Our Open Access philosophy and customer partnership approach continues to be a true differentiator and fundamental to our business strategy. As a systemically important business, the Group plays a significant role in financial markets globally, contributing to financial stability and supporting sustainable economic growth.

Refinitiv

LSEG announced the proposed acquisition of Refinitiv on 1 August 2019. This was the culmination of many months of

strategy development, deep consideration and discussion. It is a transformational transaction, strategically and financially. The combined global business will be headquartered and domiciled in the UK with a premium listing in London. The transaction received overwhelming shareholder approval in November, and we are currently engaged in the regulatory approvals process and integration planning. The transaction remains on track to close in the second half of 2020.

HKEX

In September, LSEG received an unsolicited approach from Hong Kong Exchanges and Clearing Limited (HKEX). LSEG's Board had fundamental concerns about the key aspects of the Conditional Proposal: strategy, deliverability, form of consideration and value, especially when compared to the significant value we expect to create through our planned acquisition of Refinitiv. Accordingly, the Board unanimously rejected the Conditional Proposal, which HKEX subsequently withdrew.

Governance

The Board seeks to operate to high governance and ethical standards. Further detail is available later in the Board's Corporate Governance report starting on page 78. Dominic Blakemore joined the Board as a Non-Executive Director, effective 1 January 2020, and we also welcomed Cressida Hogg to the Board as an Independent Non-Executive Director in March 2019. Following the conclusion of the Group's AGM in April 2020, Paul Heiden will step down from the LSEG Board and Dominic will assume the Chair of the Audit Committee from Paul, and Stephen O'Connor will become the Senior Independent Director. I would like to record the Board's gratitude to Paul Heiden for his significant contribution to LSEG over the last decade during which the Group has delivered significant growth and diversification. His counsel and experience have been invaluable during this period of transformational change.

In October, David Warren, Group Chief Financial Officer informed the Group of his intention to retire from the company and step down from the Board. The Board is grateful for the key role David has played in the successful growth, diversification and global expansion of our business over the last seven years as well as for his leadership when he served as Interim CEO. David will continue in his current role as Group CFO and a member of the Board through the close of the Refinitiv transaction to ensure a smooth transition to his successor. LSEG is undertaking a global search for his replacement, which is being led by the Board's Nomination Committee.

Culture

The Board, along with the executive team, seeks to promote a culture of Group-wide collaboration and customer focus. LSEG has made good progress this year on these efforts, which you can read about further on page 44. The Board has also engaged directly with employees, with candid feedback provided to Directors through a series of informal meetings, as well as more formal interaction with employee forums, which will continue in the coming year.

Corporate Sustainability

The global transition to a more sustainable economy continues to be a focus across our industry. LSEG has many touch points with stakeholders that put us in a strong position to engage in this discussion and we take our responsibility seriously. Our ability to help facilitate change is demonstrated through the diverse ecosystem of sustainable bonds listed on our markets with issuers from 18 different countries and bonds issued in 17 different currencies. FTSE Russell has also launched an innovative new index providing a forward-looking assessment of the climate risk faced by sovereigns allowing investors to reduce climate risk and greenhouse gas emissions in their portfolios.

As a global company, we are committed to playing our part, building on our engagement with UK Government initiatives such as the Green Finance Taskforce, which led to the creation of the Green Finance Institute, and the EU's High Level Expert Group and Technical Expert Group. Both of these groups included representatives from LSEG as part of their work to develop recommendations for the EU's Green Finance Taxonomy. Within LSEG, our Environmental Management Group continues to work on delivery of ambitious targets to improve our environmental efficiency year on year. Full details can be found later in this report on page 47.

Our LSEG Foundation donated GBP1.4 million in 2019 to various global and regional charities around the world. The Group also continues to encourage employees to donate their skills and time to support disadvantaged young people in the communities in which we operate.

Summary

Since becoming Chair in May 2019, I have been impressed by the calibre and focus of our employees. I'd like to thank them for their dedication and professionalism during what has been a very busy year. I would also like to thank my Board colleagues for their support, challenge and for their commitment. London Stock Exchange Group is in a position of strength, sitting at the heart of international financial markets, as we look ahead to the many opportunities within our industry. I look forward to working with the Board and the executive team to continue to develop the business for the future.

Don Robert

Chair

28 February 2020"

The Annual Report contains the following statements regarding principal risks and uncertainties facing the business, with respect to principal strategic, financial and operational risks, on pages 60 to 73, and, with respect to financial risk management, on pages 158 to 163:

"The management of risk is fundamental to the successful execution of our strategy and to the resilience of our operations. During 2019, the Group successfully adapted its systems, processes and controls, in preparation for regulatory changes and to address Brexit contingency plans. The Group continues to support its key markets and deliver stable and resilient services that meet our customers' needs.

As LSEG's risk culture, objectives, appetite, governance and operations are well established, these descriptions naturally do not significantly change from year to year. We have also included a category of emerging risks which are new to the Group or which are difficult to quantify due to their remote or evolving nature. In most cases, the mitigation for such risks is to establish appropriate contingency plans and monitor the development of the risk until it can be quantified and removed or included as a principal risk.

FURTHER DETAIL

Our strategic risk objectives, current risk focus, a narrative description of our risk appetite, how LSEG's risk management framework operates, as well as an overview of the CCPs risk management and operations, are well established and are not described here.

Detailed information can be found in our risk management oversight supplement. Please visit: www.lseg.com/about-london-stock-exchangegroup/risk-management-oversight.

LSEG Risk Governance

OVERVIEW OF PRINCIPAL RISKS:

 
 Strategic Risks          Financial Risks   Operational Risks           Emerging Risks 
  Global economy           Credit risk       Technology                  Climate-related 
  Regulatory change        Market risk       Physical threats            risk 
  Refinitiv Transaction    Liquidity risk    Model risk                  Emerging technology 
  Competition              Capital risk      Security threats 
  Transformation                             - Cyber 
  Reputation/Brand/IP                        Change management 
                                             Settlement and custodial 
                                             risks 
                                             Compliance risks 
                                             Data governance 
                                             Employees and culture 
 

STRATEGIC RISKS

Risks related to our strategy (including the implementation of strategic initiatives and external threats to the achievement of our strategy). The category also includes risks associated with reputation or brand values.

 
 Risk Description                              Mitigation                                    Risk level 
 Global economy                                 The footprint of the Group continues         Increasing 
  (Executive Lead: Chief Executive               to broaden, further improving 
  Officer, Executive Committee)                  the geographical diversification 
  As a diversified markets infrastructure        of the Group's income streams 
  business, we operate in a broad                which mitigates the risks of 
  range of equity, fixed income                  a localised economic downturn. 
  and derivative markets servicing               Furthermore, income streams across 
  clients who increasingly seek                  the business divisions of the 
  global products and solutions.                 Group comprise annuity and fee 
  If the global economy underperforms,           based recurring revenues to balance 
  lower activity in our markets                  against more cyclical and market 
  may lead to lower revenue.                     driven activity. This diversification 
  Weaker economic data and low                   will be significantly enhanced 
  levels of inflation have dominated             (including enjoying an increasing 
  central bank official rate actions.            proportion of recurring revenues) 
  The Federal Open Market Committee              if the Group 
  (FOMC) concerned about a slowing               completes the acquisition of 
  US economy, decreased the Fed                  Refinitiv, expected during H2 
  Funds target rate three times                  2020. 
  during 2019. Meanwhile the European            The Group performs regular analysis 
  Central Bank (ECB) has left rates              to monitor the markets space 
  unchanged at zero and has restarted            and the potential impacts of 
  its quantitative easing programme.             market price and volume movements 
  Ongoing geopolitical tensions                  on the business. Activities include 
  continue to add uncertainty in                 Key Risk Indicator tracking, 
  the markets and may impact investor            stress testing, and hedging. 
  confidence and activity levels.                We continue to actively monitor 
  In particular, the political                   the ongoing developments following 
  uncertainty in the UK following                the UK's exit from the EU. Committees 
  its exit from the EU, tensions                 have been established to assess 
  between the US and its major                   and address areas of impact on 
  trading partners and other countries           our operations and the Group 
  as well as tensions in Hong Kong               has formulated contingency plans 
  and in China, continue to affect               with the objectives of continuity 
  global markets.                                of market function and customer 
  The emergence toward the end                   service in the event of a divergence 
  of 2019 of the Novel Coronavirus               of regulation if no trade agreement 
  outbreak in China could have                   is achieved. 
  a significant impact on the global             The Financial Risk Committee 
  economy. In a prolonged outbreak               closely monitors and analyses 
  situation, the imposition of                   multiple market stress scenarios 
  travel restrictions, border controls           and action plans in order to 
  and quarantine protocols could                 minimise any impacts stemming 
  contribute to a major pause in                 from a potential deterioration 
  industrial productivity across                 of the macroeconomic environment. 
  the Asia                                       The stress scenarios are regularly 
  Pacific region and could suppress              reviewed and updated in response 
  demand for commodities, impact                 to changes in macroeconomic conditions. 
  the supply chain for many industries           LSEG monitors the potential impact 
  globally and the international                 of macroeconomic and political 
  retail market which in turn could              events on our operating environment 
  significantly impact the global                and business model and the Group 
  financial markets.                             is an active participant in international 
  The UK exit from the EU leaves                 and domestic regulatory debates. 
  significant uncertainty concerning 
  the political and regulatory 
  environment, the UK's future 
  relationship with the EU and 
  other trading 
  partners, and the overall impact 
  on the UK and EU economies both 
  in the short and medium term. 
  These could have adverse impacts 
  on the Group's businesses, operations, 
  financial condition and cash 
  flows. 
                                              --------------------------------------------  ----------- 
 For more information, see Market trends and our response on pages 14-20, 
  and Note 3 to the accounts, Financial Risk Management on pages 158-163. 
 Regulatory change and compliance               Changes in the regulatory environment        Increasing 
  (Executive Lead: Chief Executive               form a key input into our strategic 
  Officer, Executive Committee)                  planning, including the political 
  LSEG is a global business operating            impact on our growth strategies, 
  in multiple regulatory environments            both organic and inorganic. We 
  that reflect the diversity of                  monitor regulatory developments 
  products and the jurisdictions                 continually and engage directly 
  in which it operates. The Group                with regulatory and governmental 
  is exposed to risks associated                 authorities at local, regional 
  with the management of changes                 and national levels. 
  to these regulatory requirements.              The Group also has a structured 
  Key regulatory changes include:                Brexit programme which includes 
  Brexit - LSEG companies conducting             regulatory specialists engaging 
  regulated activities in the EU                 at appropriate levels and on 
  or with customers in the EU are                financial market infrastructure 
  subject to EU regulation. The                  considerations. Risks are actively 
  Group has implemented contingency              monitored and managed - see Emerging 
  plans to maintain continuity                   Risks. 
  of service to customers and orderly            The Group has executed the following 
  functioning of its markets, including          contingency plans for its business. 
  incorporation of new entities                  Following the European Commission 
  in the EU27 and securing authorisation         implementing decision for UK 
  within the EU27 for certain Group              CCPs on 19 December 2018, it 
  businesses. The Group continues                was announced on 18 February 
  to engage with regulators and                  2019 that LCH Ltd has been recognised 
  parties in the UK, EU and other                by ESMA as a third country CCP 
  jurisdictions to advise on financial           under Article 25 of EMIR. On 
  market infrastructure considerations           23 December 2019 the European 
  such as the potential impacts                  Commission extended this equivalence 
  of divergence.                                 decision for another 12 months 
  Regulation impacting CCPs - Regulatory         in case of a no-deal Brexit. 
  initiatives with the potential                 This recognition confirms LCH 
  to impact cleared derivatives                  Ltd's ability to continue to 
  markets and CCPs continue through              offer all clearing services for 
  international standard setters                 all products and services to 
  and regulators in the EU and                   all members and clients if there 
  US and other major jurisdictions.              were to be a no-deal Brexit scenario 
  Our primary focus remains on                   post 31 January 2020. LCH reserves 
  development of a coherent, cross-border        its right to take any action 
  regulatory framework for market                it considers appropriate at any 
  access to global CCPs, including               time, should there be a material 
  appropriate access rules under                 change in circumstances. In addition, 
  the EMIR review                                LCH SA and CC&G are allowed under 
  published in December 2019. As                 the Bank of England Temporary 
  part of this review, EMIR 2.2                  Recognition Regime (TRR) to provide 
  introduces the option to impose                clearing services and activities 
  enhanced supervision or deny                   in the UK for up to three years 
  the recognition of third country               in a 'no deal' scenario. 
  CCPs that are of systemic importance           LSEG's key objectives to provide 
  for the EU, which could have                   continuity of stable financial 
  implications for the Group's                   infrastructure services as part 
  CCPs as well as comparable compliance          of our global remit. As the various 
  frameworks for jurisdictions                   regulatory initiatives progress, 
  of equivalent regulatory frameworks.           there will be greater certainty 
  Proper calibration of EU rules                 with regard to their likely final 
  on CCP Recovery and Resolution                 form. The Group continues to 
  and harmonisation with other                   focus on remaining well positioned 
  key jurisdictions is also a key                to respond to regulatory developments 
  priority and could likely have                 and further opportunities exist 
  an impact on the Group's CCPs.                 for the Group to deliver solutions 
  The European CCP Recovery and                  to help the market address the 
  Resolution framework is expected               changing regulatory environment 
  to be finalised in 2020 - it                   including those linked with the 
  could impose additional resources              departure of the UK from the 
  for CCPs.                                      EU. 
  MiFID II/MiFIR - The Regulation 
  and the Directive came into force 
  on 3 January 2018, however the 
  European Commission and ESMA 
  commenced a targeted review process 
  in the second half of 2019 with 
  potential impacts on the Group, 
  particularly in the areas of 
  trading transparency (e.g. double 
  volume cap) and market data (fees 
  transparency and potential introduction 
  of consolidated tape). The third 
  country access rules for trading 
  venues and market participants 
  continued to be evaluated in 
  2019 and could also have a potential 
  impact to access our trading 
  venues in the UK and EU, in particular 
  the scope of the Share Trading 
  Obligation. 
  Prudential Capital Rules - In 
  June 2019, the Basel Committee 
  on Banking Supervision (BCBS) 
  published final recommendations 
  on the Basel III Framework, which 
  as currently drafted could adversely 
  impact the cleared derivatives 
  industry. One area of primary 
  importance is the treatment of 
  customer margin under the leverage 
  ratio. BCBS has announced a targeted 
  revision of the leverage ratio 
  to allow initial margin and variation 
  margin received from a client 
  to offset the replacement cost 
  and potential future exposure 
  for client cleared derivatives. 
  This is a positive development 
  for market participants and therefore 
  the Group. The EU regulatory 
  framework already recognised 
  this offsetting via the Capital 
  Requirements Regulation adopted 
  in May 2019. In 2019, the review 
  of the prudential regime for 
  investment 
  firms was finalised. The implementation 
  of the Regulation and the Directive 
  will take place in 2020 and we 
  will monitor its impact on proprietary 
  trading firms and their continued 
  ability to provide liquidity 
  on LSEG markets. 
  Regulatory change and compliance 
  (continued) 
  Benchmark Regulation - Regulatory 
  focus on the role of benchmarks 
  in the market and regulation 
  of benchmark providers continues 
  to increase in several major 
  jurisdictions around the world. 
  FTSE International Limited was 
  authorised by the UK's Financial 
  Conduct Authority (FCA) in 2018 
  as a Benchmark Administrator, 
  under the European Benchmark 
  Regulation. In March 2019 political 
  agreement was reached for sustainable 
  finance legislative proposals 
  and the ESA Review, which could 
  impact benchmarks. In October 
  2019, the Commission consulted 
  on a potential EU BMR Review. 
  Financial Transactions Tax (FTT) 
  - A sub-set of EU member states 
  are discussing, under enhanced 
  cooperation, a possible FTT, 
  which could adversely impact 
  volumes in financial markets. 
  During 2019 little progress was 
  made, but efforts continue to 
  finalise the measure. 
  Information and cyber security 
  standards - In many of our key 
  regulatory jurisdictions, there 
  is an increasing legislative 
  and regulatory focus on cyber 
  security and data protection 
  which could impact our operations 
  and compliance models. LSEG supports 
  the regulatory efforts on these 
  issues, as they increase the 
  standards for customers, vendors 
  and other third parties with 
  whom we interact. We continue 
  to support regional and global 
  efforts to harmonise these standards 
  globally to avoid conflicting 
  or duplicative requirements for 
  financial market infrastructure 
  providers operating in several 
  jurisdictions and our market 
  participants. 
                                              --------------------------------------------  ----------- 
 For more information on regulatory changes, see Market trends and our 
  response on pages 14-20. 
 Refinitiv Transaction                          An Integration Management Office             New 
  (Executive Lead: Chief Executive               for the Transaction (the IMO) 
  Officer, Executive Committee,                  has been established, headed 
  Group Board)                                   by David Shalders, Chief Integration 
  On 1 August 2019, LSEG announced               Officer and Group COO. The IMO 
  that it had agreed definitive                  is responsible for managing the 
  terms with a consortium including              overall integration planning 
  certain investment funds affiliated            process and will be responsible 
  with Blackstone, as well as Thomson            for ensuring that the synergies 
  Reuters (together, the Refinitiv               expected to result from the Transaction 
  Shareholders) to acquire Refinitiv             are properly monitored, reported 
  in an all share transaction (the               on and delivered. The IMO comprises 
  Transaction).                                  senior leaders from both LSEG 
  Completion of the Transaction                  and Refinitiv and will build 
  is subject to a number of conditions           upon the strong working relationship 
  (including merger control clearances           already established between the 
  and regulatory approvals) which                two organisations. LSEG has also 
  may not be satisfied or waived,                engaged a leading global external 
  or which may not be capable of                 consulting firm, which is a specialist 
  satisfaction without the imposition            in planning and delivering large-scale 
  of undertakings, conditions or                 and complex business integration 
  divestments, which could be material.          projects for global institutions, 
  If merger clearances are not                   to support the integration. 
  obtained or there is material                  The integration will be managed 
  delay in reaching agreement on                 in two phases, integration planning 
  remedies to facilitate the Transaction,        (prior to Completion) and integration 
  LSEG will in certain circumstances             implementation (following Completion). 
  pay a termination fee of GBP198.3              Each phase will be overseen by 
  million to the Refinitiv Shareholders.         an 
  Delay in completing the Transaction            integration committee of senior 
  will prolong the period of uncertainty         executives, led by David Schwimmer, 
  for LSEG, and both delay and                   with representation from LSEG, 
  failure to complete may result                 Refinitiv and the Refinitiv Shareholders, 
  in the accrual of additional                   and will report to the Board 
  and, in the case of a failure                  on a regular basis. 
  to complete, wasted costs, without 
  any of the potential benefits 
  of the Transaction having been 
  achieved. Further, LSEG's management 
  would have spent time in connection 
  with the Transaction that could 
  otherwise have been spent more 
  productively in connection with 
  other activities of LSEG. 
  In addition, the success of the 
  Transaction will be dependent 
  upon LSEG's ability to integrate 
  the businesses of LSEG and Refinitiv; 
  there will be challenges associated 
  with the integration and the 
  delivery of synergies and/or 
  the benefits expected as a result 
  of the Transaction may not be 
  achieved as anticipated or at 
  all. 
  There are also further risks 
  in relation to the Transaction, 
  existing risks to LSEG that will 
  be impacted by the Transaction 
  and new risks to LSEG as a result 
  of the Transaction which are 
  each described in the shareholder 
  circular related to the Transaction 
  dated 6 November 2019. 
                                              --------------------------------------------  ----------- 
 Competition                                    Competitive markets are, by their            Static 
  (Executive Lead: Chief Executive               very nature, dynamic, and the 
  Officer, Group Director for each               effects of competitor activity 
  division, Chief Information Officer)           can never be fully mitigated. 
  The competitive environment in                 Senior management and a broad 
  which LSEG operates has undergone,             range of customer-facing staff 
  and continues to undergo, transformational     in all business areas are actively 
  changes triggered by market participants,      engaged with clients to understand 
  investors, infrastructure operators            their evolving needs and motivations. 
  and regulators, as well as intensifying        We have established a Group Relationship 
  competition. The Group operates                Programme to co-ordinate this 
  in a highly competitive industry.              across Group businesses globally. 
  Continued consolidation has fuelled            The Group undertakes constant 
  competition including between                  market monitoring and pricing 
  groups in different geographical               revision to mitigate risks and 
  areas. Sophisticated FMI providers             ensure we are competitive. 
  are diversifying and expanding.                Commercial initiatives are aligned 
  As a result, LSEG faces competition            with our clients and this is 
  from market operators from the                 complemented by an ongoing focus 
  EU, US and Asia that are increasingly          on technology operations and 
  broadening their propositions                  innovation. 
  (organically, as well as through 
  consolidation) to gain access 
  to new product areas and geographies. 
  The Group's Information Services 
  business faces competition from 
  a variety of sources, notably 
  from index providers which offer 
  indices and other benchmarking 
  tools which compete with those 
  offered by the Group as well 
  as from other venues that offer 
  market data relating to securities 
  that are traded on the Group's 
  markets. As the Information Services 
  offering diversifies and seeks 
  to meet customer needs for new 
  data sources, segments and asset 
  classes, it is facing a broader 
  range of competitors. 
  In Post Trade Services, we continue 
  to see increased clearing activity 
  across a number of asset classes, 
  in particular OTC derivatives 
  products, reflecting the attractiveness 
  of the Group's current customer 
  offering and open access philosophy. 
  The competition within the post 
  trade environment has also intensified 
  due to a general industry move 
  towards inter-operability of 
  CCPs (where participants on trading 
  platforms are offered a choice 
  of CCPs), strengthened by regulatory 
  developments, including MiFID 
  II and MiFIR. 
  Our Capital Markets operations 
  face continuing risk from competitors' 
  commercial and technological 
  offerings. There is strong competition 
  for primary listings and capital 
  raises from other global exchanges 
  and regional centres. Private 
  equity, venture capital and new 
  options such as crowd-funding 
  and crypto-currencies are increasingly 
  being considered as alternatives 
  methods of capital formation 
  for issuers. We maintain a dedicated 
  international team who promote 
  the benefits of listing on our 
  markets to international issuers, 
  the global advisory community 
  and other stakeholders. The Group 
  will need to continue strong 
  and collaborative dialogue with 
  customers and other relevant 
  industry stakeholders to ensure 
  it remains responsive to changing 
  requirements and is able to react 
  in a timely manner. 
  If competitors are quicker to 
  access and deploy technology 
  innovations such as artificial 
  intelligence (AI), machine learning 
  and analytics, they may achieve 
  a valuable advantage which may 
  impact the attractiveness of 
  the Group's offering and its 
  relative profitability. Our integrated 
  and business-led approach to 
  technology innovation helps us 
  to manage this risk and the Group 
  is well advanced in investigating 
  and applying numerous new technology 
  innovations across its business 
  portfolio. 
  In Technology Services, there 
  is intense competition across 
  all our current activities and 
  in some of our growth areas, 
  in addition to strong incumbent 
  providers. New entrants are increasing 
  from both within and outside 
  of our traditional competition 
  base and some consolidation is 
  evident. Start-ups, which may 
  be sponsored by existing LSEG 
  competitors or customers, are 
  introducing new technology and 
  commercial models to our customer 
  base to which we need to respond 
  with new products and services 
  of our own. Continual customer 
  dialogue, facilitated through 
  our partnership approach and 
  investment in product management 
  and innovation are critical to 
  understanding and managing the 
  impact of changing customer requirements 
  in our technology and other business 
  lines. 
                                              --------------------------------------------  ----------- 
 Transformation                                 The Group's exposure to transformation       Increasing 
  (Executive Lead: Chief Executive               risk is mitigated through the 
  Officer, Chief Operating Officer)              application of the Group's Enterprise 
  The Group is exposed to transformation         Risk Management Framework to 
  risks (risk of loss or failure                 deploy consistent, appropriate 
  resulting from change/transformation           Risk Management across the Group, 
  or integration) as it continues                both during and post-acquisition. 
  to grow rapidly both organically               The governance of the Group following 
  and inorganically. Acquisitions                a merger or acquisition is aligned 
  may, in some cases, be complex                 and strengthened as appropriate. 
  or necessitate change to operating             The Integration Management Office, 
  models, business models, technology            reporting to the Executive Committee, 
  and people. This is particularly               has been established to oversee 
  likely for the current target                  the completion of the planned 
  acquisition of Refinitiv. In                   acquisition of Refinitiv. Oversight 
  general, the combined business'                during transformation is provided 
  success will be dependent upon                 by a Steering Committee comprising 
  its ability to integrate the                   Executive Committee members with 
  businesses of LSEG and Refinitiv;              regular reports to the Board 
  there will be challenges associated            Risk Committee and the Board. 
  with the integration and the                   The Group has an effective track 
  delivery of synergies, the benefits            record of integrating acquisitions 
  or business performance expected               and delivering tangible synergies, 
  as a result of the transaction                 supported by robust governance 
  may not be achieved as anticipated             and programme management structures 
  or at all, and the costs to achieve            through the Group's Change Framework 
  the synergies and benefits may                 to mitigate change-related risks 
  be higher than anticipated. This 
  derives from internal (organic) 
  change and change required by 
  the integration of acquisitions 
  whereby the Group targets specific 
  synergy benefits, necessitating 
  change to operating models, business 
  models, technology and people. 
  A failure to align the businesses 
  of the Group successfully may 
  lead to an increased cost base 
  without a commensurate increase 
  in revenue; a failure to benefit 
  from future product and market 
  opportunities; and risks in respect 
  of capital requirements, regulatory 
  relationships and management 
  time. 
  The additional effort related 
  to M&A, especially to the potential 
  acquisition of Refinitiv and 
  post-transaction alignment activities, 
  could have an adverse impact 
  on the Group's day-to-day performance 
  and/or key strategic initiatives 
  which could damage the Group's 
  reputation and financial performance. 
  The size and complexity of current 
  acquisition targets as well as 
  those acquired in the past five 
  years have increased the Group's 
  change management and transformation 
  risks. However, the target acquisitions 
  aim to increase the Group's opportunities 
  to compete on a global scale 
  and diversify its revenue footprint 
  by industry, geography and customer 
  base 
                                              --------------------------------------------  ----------- 
 Reputation/Brand                               LSEG has policies and procedures             Static 
  (Executive Lead: Chief Executive               in place which are designed to 
  Officer, Executive Committee)                  ensure the appropriate use of 
  A number of the Group's businesses             the Group's brands and to maintain 
  have iconic national brands that               the integrity of the Group's 
  are well- recognised at international          reputation. 
  as well as at national levels.                 LSEG actively monitors the use 
  The strong reputation of the                   of its brands and other intellectual 
  Group's businesses and their                   property, including monitoring 
  valuable brand names are a key                 for internet brand impersonation 
  selling point. Any events or                   and social media sentiment, in 
  actions that damage the reputation             order to prevent, identify and 
  or brands of the Group, such                   address any infringements. 
  as those propagated via social                 The Group protects its intellectual 
  media or caused by its misuse,                 property by relying upon a combination 
  could adversely affect the Group's             of trademark laws, copyright 
  business, financial condition                  laws, patent laws, trade secret 
  and operating results.                         protection, confidentiality agreements 
  Failure to protect the Group's                 and other contractual arrangements 
  intellectual property rights                   with its affiliates, customers, 
  adequately could result in costs               suppliers, strategic partners 
  for the Group, negatively impact               and others. 
  the Group's reputation and affect 
  the ability of the Group to compete 
  effectively. Further, defending 
  or enforcing the Group's intellectual 
  property rights could result 
  in the expenditure of significant 
  financial and managerial resources, 
  which could adversely affect 
  the Group's business, financial 
  condition and operating results. 
                                              --------------------------------------------  ----------- 
 

FINANCIAL RISKS

The risk of financial failure, reputational loss, loss of earnings and/or capital as a result of investment activity, lack of liquidity, funding or capital, and/or the inappropriate recording, reporting and disclosure of financial results, taxation or regulatory information.

 
 Risk Description                            Mitigation                                    Risk level 
 Credit risk                                  Clearing                                     Static 
  (Executive Lead: Chief Financial             As CCP members continue to work 
  Officer, Director of Post Trade,             towards strengthening their balance 
  Financial Risk Committee)                    sheets, the risk to LSEG CCPs 
  Clearing                                     of a member default reduces, 
  CCPs in the Group are exposed                although continuing geopolitical 
  to credit risk as a result of                uncertainty continues, and the 
  their clearing activities. A                 banking sectors of some countries 
  default by a CCP clearing member             remain stressed. The financial 
  that could not be managed within             risks associated with clearing 
  the resources of the defaulted               operations are further mitigated 
  clearing member could adversely              by: 
  affect that CCP's revenues and               --Strict CCP membership rules 
  its customers' reputation. CCPs              including supervisory capital, 
  authorised in the EU are required            financial strength and operational 
  to make a proportion of their                capability 
  regulatory capital available                 --The maintenance of prudent 
  to cover default losses after                levels of margin and default 
  the defaulter's resources have               funds to cover exposures to participants. 
  been exhausted and prior to                  Members deposit margin computed 
  allocation of losses to non-defaulters       at least daily, to cover the 
  and so, in extreme circumstances,            expected costs which the clearing 
  a default could lead to a call               service would incur in closing 
  on the Group CCPs' own capital               out open positions in a volatile 
  'skin-in-the-game'. CCPs may                 market in the event of the member's 
  also be exposed to credit exposure           default. A default fund sized 
  to providers of infrastructure               to cover the default of at least 
  services such as Central Securities          the two members with the largest 
  Depositaries (CSDs) and commercial           exposures in each service using 
  banks providing investment and               a suite of extreme but plausible 
  operational services.                        stress tests mutualises losses 
  In addition, certain CCPs within             in excess of margin amongst the 
  the Group have interoperability              clearing members 
  margin arrangements with other               --Regular 'Fire Drills' are carried 
  CCPs requiring collateral to                 out to test the operational soundness 
  be exchanged in proportion to                of the CCPs' default management 
  the value of the underlying                  processes 
  transactions.                                --Infrastructure providers are 
  The relevant clearing provider               regularly assessed in line with 
  entities within the Group are                policy. 
  therefore exposed to the risk                Non-Clearing 
  of a default of other CCPs under             Policies are in place to ensure 
  such arrangements.                           that investment counterparties 
  Non-Clearing                                 are of good credit quality, and 
  CCPs and other parts of LSEG                 at least 95% of CCP commercial 
  Group are also exposed to credit             bank deposits are secured. CCP 
  risk as a result of placing                  and non-CCP counterparty concentration 
  money with investment counterparties         risk is consolidated and monitored 
  on both a secured and unsecured              daily at the Group level and 
  basis. Losses may occur due                  reported to the Executive Committee 
  to the default of either the                 and to the Board Risk Committee, 
  investment counterparty or of                including limits and status rating. 
  the issuer of bonds bought outright          Group companies make a judgement 
  or received as collateral. The               on the credit quality of their 
  Group's credit risk also relates             customers based upon the customer's 
  to its customers and counterparties          financial position, the recurring 
  being unable to meet their obligations       nature of billing and collection 
  to the Group either in part                  arrangements and, historically, 
  or in full.                                  a low incidence of default. 
  Regulators are increasingly 
  looking at the impacts of climate 
  change on credit risks, although 
  methodologies are in their infancy. 
  We do not believe this will 
  give rise to significant increased 
  risks in the short term, and 
  will monitor market development, 
  in particular the proposed climate 
  stress tests as part of the 
  UK Prudential Regulation Authority 
  Biennial Exploratory Scenario 
  (BES) in 2021. 
                                            --------------------------------------------  ----------- 
 For more information on this risk see the Post Trade Services section 
  of the Segmental Review on pages 30-34, and Note 3 to the accounts, 
  Financial Risk Management on pages 158-163. 
 Market risk                                  Clearing                                     Static 
  (Chief Financial Officer, Director           The margins and default funds 
  of Post Trade)                               referred to previously are sized 
  Clearing                                     to protect against latent market 
  The Group's CCPs assume the                  risk. The adequacy of these resources 
  counterparty risk for all transactions       is evaluated daily by subjecting 
  that are cleared through their               member and customer positions 
  markets. In the event of default             to 'extreme but plausible' stress 
  of their clearing members, therefore,        scenarios encapsulating not only 
  credit risk will manifest itself             historical crises, but theoretical 
  as market risk. As this market               forward-looking scenarios 
  risk is only present in the                  and decorrelation events. All 
  event of default this is referred            our CCPs are compliant with the 
  to as 'latent market risk'.                  appropriate regulatory requirements 
  The latent market risk includes              regarding margin calculations, 
  interest rate risk, foreign                  capital and default rules. Latent 
  exchange risk, equity risk and               market risk is 
  commodity price risk as well                 monitored and managed on a day-to-day 
  as country risk, issuer risk                 basis by the risk teams within 
  and concentration risk. This                 the clearing services. Committees 
  risk is greater if market conditions         overseeing market risks meet 
  are unfavourable at the time                 on a regular basis. 
  of the default.                              Non-Clearing 
  Non-Clearing                                 Foreign exchange (FX) risk is 
  The Group is exposed to foreign              monitored closely and translation 
  exchange risk as a result of                 risk is managed by matching the 
  its broadening geographical                  currency of the Group's debt 
  footprint. There are, however,               to its earnings to protect key 
  also benefits of global diversification      ratios and partially hedge currency 
  including reduced exposure to                net assets. FX derivatives including 
  local events such as the UK                  cross-currency swaps are used 
  Brexit vote and the                          under a control framework governed 
  geopolitical tensions.                       by LSEG Board approved policy. 
  The Group is exposed to interest             The split between floating and 
  rate risk through its borrowing              fixed debt is managed to support 
  activities (including to support             the Group's target of maintaining 
  M&A objectives) and treasury                 an interest coverage ratio that 
  investments. Further changes                 underpins a good investment grade 
  in interest rates in 2020 may                credit rating. 
  increase the Group's exposure                Authorised derivatives can be 
  to these risks.                              used to: 
  Similar to credit risks, regulators          -- transform fixed rate bond 
  are also considering the impacts             debt, to supplement a mix of 
  of climate change on market                  short dated commercial paper 
  (systemic) risks, and whilst                 and floating rate loan borrowings, 
  we do not foresee any short-term             to achieve the Group's policy 
  material risks, we will also                 objective, and / or 
  keep this under review.                      --hedge prospective FX and interest 
                                               rates ahead of the completion 
                                               of a planned M&A transaction 
                                               to protect the financial position 
                                               of the Group. 
                                            --------------------------------------------  ----------- 
 For more information on this risk, see Note 3 to the accounts, Financial 
  Risk Management on pages 158-163. 
 Liquidity risk                               Clearing                                     Static 
  (Chief Financial Officer, Director           The Group's CCPs have put in 
  of Post Trade, Financial Risk                place regulatory compliant liquidity 
  Committee)                                   plans for day-to-day liquidity 
  Clearing                                     management, including contingencies 
  There are two distinct types                 for stressed conditions. The 
  of risk to which the Group's                 Group's CCPs have multiple layers 
  CCPs are exposed to that are                 of defence against liquidity 
  commonly referred to as liquidity            shortfalls including intraday 
  risk - market liquidity risk                 margin calls, minimum cash balances, 
  and funding liquidity risk.                  access to contingent liquidity 
  The former is the risk that                  arrangements, and, for certain 
  it may be difficult or expensive             CCPs, access to central bank 
  to liquidate a large or concentrated         liquidity. 
  position and is addressed under              Under the Enterprise Risk Management 
  market risk. The latter is the               Framework, CCP investments must 
  risk that the CCP may not have               be made in compliance with the 
  enough cash to pay variation                 Group CCP Financial Risk Policy 
  margin to non-defaulters or                  (as well as the policies of the 
  to physically settle securities              CCPs themselves). These policies 
  delivered by a non-defaulter                 stipulate a number of Risk Management 
  that cannot be on-sold to a                  standards including investment 
  defaulter and this is the subject            limits (secured and unsecured) 
  of this section.                             and liquidity coverage ratios. 
  The Group's CCPs collect clearing            Committees overseeing CCP investment 
  members' margin and/or default               risk meet regularly. 
  funds contributions in cash                  Each CCP monitors its liquidity 
  and/or in highly liquid securities.          needs daily under stressed and 
  To maintain sufficient ongoing               unstressed assumptions and reports 
  liquidity and immediate access               to the Group Financial Risk Committee 
  to funds, the Group's CCPs deposit           each month. 
  the cash received in highly                  Non-Clearing 
  liquid and secure investments,               Requirements for liquidity including 
  such as sovereign bonds and                  headroom requirements are set 
  reverse repos, as mandated under             out in the Group's Board approved 
  EMIR; securities deposited by                Treasury Policy. The Group maintains 
  clearing members are therefore               appropriately sized liquidity 
  held in dedicated accounts with              facilities for business as usual 
  CSDs and/or International Central            and, from time to time, large 
  Securities Depositaries (ICSDs).             scale acquisitions and monitors 
  The Group's CCPs also hold a                 its requirements on an ongoing 
  small proportion of their investments        basis. 
  in unsecured bank and money                  Stressed facility headroom is 
  market deposits subject to the               assessed regularly and on a one-off 
  limitations imposed by EMIR.                 basis for working capital reviews 
  The successful operation of                  associated with large scale acquisitions 
  these investment activities                  using plausible downside business 
  is contingent on general market              projections. 
  conditions and there is no guarantee         Group Treasury risk is monitored 
  that such                                    daily and is managed within the 
  investments may be exempt from               constraints of a Board approved 
  market losses.                               policy by the Group Treasury 
  Non-Clearing                                 team and is overseen by the Treasury 
  Liquidity risk in a non-clearing             Committee (a sub- 
  context is the risk that the                 Committee of the Financial Risk 
  firm may be unable to make payments          Committee, both chaired by the 
  as they fall due.                            CFO). An update on Group Treasury 
                                               risks and actions is provided 
                                               monthly to the Financial Risk 
                                               Committee and to each meeting 
                                               of the Board Risk Committee. 
                                            --------------------------------------------  ----------- 
 Capital risk                                 The Group's Capital Management               Static 
  (Chief Financial Officer, Financial          Policy provides a framework to 
  Risk Committee)                              ensure the Group maintains suitable 
  Principal risks to managing                  capital levels (both at Group 
  the Group's capital are:                     and solo entity levels), and 
  --In respect of regulated entities,          effectively manages the risks 
  capital adequacy compliance                  thereof. The Group's Treasury 
  risk (the risk that regulated                Policy recognises the need to 
  entities do not maintain and                 observe regulatory requirements 
  report sufficient qualifying                 in the management of the Group's 
  capital to meet regulatory requirements)     resources. 
  and capital reporting compliance             The Risk Appetite approved by 
  risk (the risk that regulated                the Board includes components 
  entities fail to comply with                 related to the Group's leverage 
  capital reporting and regulatory             ratios and capital risks; Key 
  obligations). If a regulated                 Risk Indicators are monitored 
  entity in the Group fails to                 regularly. The Group maintains 
  ensure that sufficient capital               an ongoing review of the capital 
  resources are maintained to                  positions of its regulated entities 
  meet regulatory requirements,                to ensure that they operate within 
  this could lead to loss of regulatory        capital limits which are overseen 
  approvals and/or financial sanctions         by the Financial Risk Committee, 
  --In respect of regulated and                the Executive Committee and the 
  unregulated entities, commercial             Board. The Group can manage its 
  capital adequacy and quality                 capital structure by varying 
  risk (the risk that Group and                returns to shareholders, issuing 
  solo entities do not maintain                new shares or increasing or reducing 
  both sufficient quantity and                 borrowings. The Board reviews 
  quality of capital to meet commercial        dividend policy and funding capacity 
  requirements) and investment                 on a regular basis and the Group 
  return risk (the risk that capital           maintains comfortable levels 
  is held in subsidiaries or invested          of debt facility headroom. 
  in projects that generate a                  The Group regularly assesses 
  return that is below the Group's             debt and equity markets to maintain 
  cost of capital)                             access to new capital at reasonable 
  --Availability of debt or equity             cost. The Group is mindful of 
  capital (whether specific to                 potential impacts on its key 
  the Group or driven by general               metrics when considering changes 
  financial market conditions)                 to its capital structure. 
                                            --------------------------------------------  ----------- 
 For more information on this risk, see Note 3 to the accounts, Financial 
  Risk Management on pages 158-163. 
 

OPERATIONAL RISKS

The risk of loss, or other adverse consequences to the business, resulting from inadequate or failed internal processes, people and systems, or from external events.

 
 Risk Description                           Mitigation                                        Risk level 
 Technology                                  The performance and availability                 Static 
  (Responsibility: Chief Operating            of the Group's systems are constantly 
  Officer, Chief Technology Officer)          reviewed and monitored to prevent 
  LSEG is highly dependent on                 problems arising and where possible, 
  the development and operation               ensure a prompt response to any 
  of its sophisticated technology             potential service-impacting incident. 
  and advanced information systems            The Group continues actively 
  and those of its third-party                to identify, manage and mitigate 
  service providers. Technology               risks associated with the consolidation 
  failures may impact our clients             of technology development and 
  and the orderly running of our              operations. Regular rigorous 
  markets, potentially leading                business impact and operational 
  to system outages.                          risk scenario analysis is performed 
  The Group is reliant on outsourced          in conjunction with the Group 
  service providers for key technology        Risk, Group Business Continuity 
  services and data provision                 and Crisis Management functions 
  and actively manages relationships          to identify, assess and remedy 
  with strategic technology suppliers         potential system and governance 
  to avoid a breakdown in service             vulnerabilities. In addition, 
  provision. The Group also actively          all technology solutions are 
  monitors new technological developments     comprehensively tested by both 
  and opportunities for innovation.           LSEG Technology and third-party 
                                              quality assurance providers as 
                                              appropriate; functional, nonfunctional, 
                                              user-acceptance and other testing 
                                              is performed across a number 
                                              of technical environments to 
                                              ensure products are ready for 
                                              deployment. 
                                              The Group's technology teams 
                                              mitigate the risk of resource 
                                              over-stretch by ensuring prioritisation 
                                              of key development and operations 
                                              activities, and resource utilisation 
                                              and allocation are kept under 
                                              constant review. The LSEG Technology 
                                              systems are designed to be software 
                                              and hardware fault tolerant and 
                                              alternative systems are available 
                                              in the unlikely event of multiple 
                                              failures from which the system 
                                              is unrecoverable. The Group has 
                                              worked to enhance its service 
                                              management capability and tooling 
                                              to enhance technology service 
                                              delivery. 
                                              The Group actively manages relationships 
                                              with key strategic technology 
                                              suppliers to avoid any breakdown 
                                              in service provision which could 
                                              adversely affect the Group's 
                                              businesses. Where 
                                              possible the Group has identified 
                                              alternative suppliers that could 
                                              be engaged in the event of a 
                                              third party failing to deliver 
                                              on its contractual commitments. 
                                              The Group actively monitors new 
                                              technological developments and 
                                              opportunities such as blockchain 
                                              and AI. 
                                           ------------------------------------------------  ----------- 
 For more information, see the Technology Services section of the Segmental 
  Review on page 39. 
 Physical threats                            Security threats are treated                     Static 
  (Executive Lead: Chief Operating            with the utmost seriousness. 
  Officer)                                    The Group has robust physical 
  The Group is reliant upon secure            security arrangements. 
  premises to protect its employees           The Group is supported by relevant 
  and physical assets as well                 governmental organisations in 
  as deploying appropriate safeguards         our key areas of operation. Security 
  to ensure uninterrupted operation           teams respond to intelligence 
  of its IT systems and infrastructure.       received and liaise closely with 
  Terrorist attacks and similar               police and global government 
  activities directed against                 agencies. Across major hubs covering 
  our offices, operations, computer           the UK, Europe, the Americas 
  systems or networks could disrupt           and Asia, the Group maintains 
  our markets, harm staff, tenants            close monitoring of geopolitical 
  and visitors, and severely disrupt          threats and horizon scanning 
  our business operations. Civil              through a third-party security 
  or political unrest could impact            monitoring service. Where events 
  companies within the Group.                 are detected, response 
  Long-term unavailability of                 support services are mobilised 
  key premises                                to support as required. The Group 
  could lead to the loss of customer          has well established and regularly 
  confidence and reputational                 tested business continuity and 
  damages.                                    crisis management procedures. 
  Climate change may cause an                 The Group assesses its 
  increase in the severity and                dependencies on critical suppliers 
  frequency of extreme weather                and ensures robust contingency 
  events across the locations                 measures are in place. 
  where LSEG operates. This could 
  disrupt business operations, 
  through damage to offices and 
  infrastructure, and cause harm 
  to staff. 
                                           ------------------------------------------------  ----------- 
 Model Risk                                  LSEG businesses have in place                    Static 
  (Executive Lead: Model Risk                 industry standard model risk 
  Committee)                                  control and governance pillars, 
  The Group defines model risk                including a Model Risk Policy, 
  as the potential loss an institution        model inventory tools, documentation 
  may incur, as a consequence                 templates and standards. 
  of decisions that could be principally      Robust model validation is in 
  based on the output of models,              place to ensure our models are 
  due to errors in the development,           fit for purpose and appropriately 
  implementation or use of such               developed and implemented. The 
  models.                                     Model Risk Management team provides 
  The key model risks are in CCP              model risk status reports on 
  margining, Yield Book mortgage              a quarterly basis to the Model 
  valuation, Environmental, Social            Risk Committee, which oversees 
  and Governance (ESG) scoring                model risk across the Group. 
  and the firms' capital models. 
  Model risk can be both reputational 
  and financial. 
                                           ------------------------------------------------  ----------- 
 Security threats - Cyber                    The Group continues to invest                    Increasing 
  (Executive Lead: Chief Information          in and enhance its information 
  Officer, Chief Information Security         security control environment, 
  Officer)                                    cyber defences and operational 
  Public and private organisations            processes, as it delivers its 
  continue to be targeted by increasingly     Board approved Cyber Security 
  sophisticated cyber threats.                Strategy. 
  Threats such as ransomware,                 Extensive organisational, technological 
  theft of customer data and distributed      and culture measures aligned 
  denial of service attacks were              to the National Institute of 
  increasingly significant to                 Standards and Technology (NIST) 
  the financial industry as a                 control framework are in place 
  whole in 2019.                              to prevent, detect, respond to 
  The Group's data, IT systems                and recover from cyber security 
  and networks, and those of its              threats. 
  third-party service providers,              Regular testing of security controls 
  may be vulnerable to threats,               and incident response processes 
  such as cyber-attacks, data                 is undertaken, both internally 
  breach or other leakage of sensitive        across our three lines of defence 
  data, which could adversely                 model and externally by independent 
  affect the Group's business.                third parties to provide assurance 
  Additionally, new emerging technologies     over the effectiveness of cyber 
  such as cloud computing and                 security controls and recovery 
  AI could impact our cyber risk              processes. 
  profile.                                    The Group monitors intelligence 
  A major information security                and liaises closely with global 
  breach that results in data                 Government agencies as well as 
  and intellectual property loss,             industry forums and regulators 
  system unavailability or loss               to help improve our ability to 
  of integrity of data or systems,            respond to the evolving threats 
  could have a significant negative           faced by us and our industry. 
  impact on our reputation, financial 
  results and the confidence of 
  our clients and could lead to 
  fines and regulatory censure. 
                                           ------------------------------------------------  ----------- 
 Change management                           The risks associated with change                 Static 
  (Executive Lead: Chief Operating            are mitigated by effective implementation 
  Officer, Chief Information Officer)         of the Group's Change framework. 
  The considerable change agenda              This includes Board oversight 
  exposes the Group to the risk               across the Group's change portfolio 
  that change is either misaligned            and project pipeline, to ensure 
  with the Group's strategic objectives       these align to the Group and 
  or not managed effectively within           Divisional strategies and support 
  time, cost and quality criteria.            our financial plans. Appropriate 
  The volume of change is driven              governance, risk and executive 
  by both internal and external               oversight is exercised over individual 
  factors. Internal factors include           programmes and projects based 
  the diversification strategy                on the scale, complexity and 
  of the Group and its drive for              impact of the change. The purpose 
  technology innovation, consolidation        of this oversight is to confirm 
  and operational resilience.                 changes do not breach the Group's 
  External factors include the                risk appetite, are compliant 
  changing regulatory landscape               with the approved project management 
  and requirements which necessitate          policy and to oversee the management 
  changes to our                              of budget, resource, 
  systems and processes. Design               escalations, risks, issues and 
  defects, errors, failures or                dependencies. 
  delays associated with new,                 For software specific development, 
  modified or upgraded technology,            software design methodologies, 
  products or services introduced             testing regimes and test environments 
  by LSEG and Refinitiv, and therefore        are continuously being enhanced 
  the combined business, could                to minimise implementation risk. 
  negatively impact its business. 
                                           ------------------------------------------------  ----------- 
 For more information, see the Chair's statement on pages 4-5, and the 
  Chief Executive's statement on pages 6-9. 
 Settlement and custodial risks              Operational risk related to settlement           Static 
  (Executive Lead: Director of                and custodial operations is minimised 
  Post Trade)                                 via highly automated processes 
  The Group's CCPs are exposed                reducing administrative activities 
  to operational risks associated             while formalising procedures 
  with clearing transactions and              for all services. 
  the management of collateral,               The operations of the settlement 
  particularly where there are                service are outsourced to the 
  manual processes and controls.              European Central Bank (TARGET2-Securities). 
  While the Group's CCPs have                 The CSD mitigates technology 
  in place procedures and controls            risk by providing for redundancy 
  to prevent failures of these                of systems, daily backup of data, 
  processes, and to mitigate the              fully updated remote recovery 
  impact of any such failures,                sites and SLAs with outsourcers. 
  any operational error could                 Our CSD and CCPs Business Continuity 
  have a material adverse effect              Plan covers all the critical 
  on the Group's reputation, business,        operational processes and related 
  financial condition and operating           activities. 
  results. 
  The Group provides routing, 
  netting and settlement and custody 
  services through its CSD to 
  ensure that securities are settled 
  in a timely and secure manner. 
  There are operational risks 
  associated with such services, 
  particularly where processes 
  are not fully automated. 
                                           ------------------------------------------------  ----------- 
 Compliance                                  The Group continues to maintain                  Static 
  (Executive Lead: Chief Executive            systems and controls to mitigate 
  Officer, Executive Committee)               compliance risk. Compliance policies 
  There is a risk that one or                 and procedures are regularly 
  more of the Group's entities                reviewed to ensure that Group 
  may fail to comply with the                 entities and staff are compliant 
  laws and regulatory requirements            with applicable laws and regulations 
  to which it is, or becomes,                 and uphold our corporate standards. 
  subject. In this event, the                 All staff across the Group are 
  entity in question may be subject           subject to mandatory compliance 
  to censures, fines and other                training 
  regulatory or legal proceedings 
                                           ------------------------------------------------  ----------- 
 Data Governance                             Data standards are defined through               Static 
  (Executive Lead: Chief Information          the Chief Data Office (CDO) which 
  Officer, Chief Data Officer)                identifies the various data held 
  Through its various entities,               across the Group, access rights/entitlements, 
  LSEG collects, owns, licenses,              any legal or regulatory restrictions 
  calculates, transforms, and                 which may apply and how such 
  distributes data in many forms              data is used and the intended 
  (e.g. structured, unstructured,             future uses. The framework sets 
  electronic, and print formats,              out the principles to ensure 
  audio-visual data, production,              Group Data is of the highest 
  testing, archive data, derived              quality and meets the highest 
  data, etc.). LSEG is accountable            standards, while highlighting 
  to its customers, counterparties,           key characteristics of data which 
  owners, vendors, regulators,                are important for measurement, 
  and the public, for the careful             oversight, and governance. 
  and proper protection and use 
  of its data. As such the 
  Group has defined a consistent, 
  standardised approach to procurement, 
  collection, ingestion, transformation, 
  quality, storage, retention, 
  calculations and disposition 
  of its data. 
  Failure to govern the Group's 
  data effectively, could result 
  in this data being unfit for 
  purpose with respect to availability, 
  completeness, accuracy, validity, 
  usage, entitlement and timeliness. 
  This could result in the Group 
  or its customers and stakeholders 
  placing reliance on inadequate 
  data when making strategic or 
  operational decisions which 
  could adversely affect the Group's 
  business, financial condition 
  and operating results 
                                           ------------------------------------------------  ----------- 
 Employees and culture                       We focus on a number of strategic                Static 
  (Executive Lead: Group HR Director)         initiatives to ensure we attract 
  The calibre and performance                 and retain the right calibre 
  of our leaders and colleagues               of talent for our business and 
  is critical to the success of               continue to facilitate a culture 
  the Group.                                  of high performance. 
  The Group's ability to attract              We have a rigorous in-house recruitment 
  and retain key personnel is                 and selection process, to ensure 
  dependent on several factors.               that we are bringing the best 
  This includes organisational                possible talent into the organisation, 
  culture and reputation, prevailing          in terms of their skills, technical 
  market conditions, compensation             capabilities, cultural fit and 
  packages offered by competing               potential. We undertake a comprehensive 
  companies, and any regulatory               annual review of critical roles, 
  impact thereon. These factors               and ensure we have succession 
  also encompass the Group's ability          plans in place to 
  to continue to have appropriate             minimise the impact of losing 
  variable remuneration and retention         critical personnel. We monitor 
  arrangements in place, which                the attrition in each division 
  help drive strong business performance      and country, in addition to any 
  and alignment to long-term shareholder      critical colleague turnover, 
  value and returns, impact the               so that appropriate mitigation 
  size of the local labour force              can be taken where needed. 
  with relevant experience, and               We aim to remove barriers to 
  the number of businesses competing          our colleagues' overall sense 
  for such talent. Whilst the                 of engagement, proactively measuring 
  Group focuses very carefully                how satisfied they are with their 
  on the attraction and retention             working experience at LSEG, and 
  of talent, if unsuccessful,                 the extent to which they would 
  it may adversely affect the                 recommend it as a place to work, 
  Group's ability to conduct its              via our annual engagement 'Have 
  business through an inability               Your Say' survey. 
  to execute business operations              We recognise that the overall 
  and strategies effectively.                 wellbeing of our colleagues is 
  Cultivating a diverse talent                vital for our continued performance 
  pool and an inclusive culture               and have introduced a proactive 
  is of great importance to the               approach to wellbeing in the 
  Group to reflect the societies              UK, which we are in the process 
  we serve, both for the innovation           of rolling out globally. This 
  benefits that diversity of thought          looks to improve wellbeing across 
  help to promote, but also in                five dimensions: physical, mental, 
  light of increased industry-wide            financial, social purpose, and 
  expectations for ESG transparency.          work-life balance. We also operate 
  If the Group were unable to                 a Speak Up campaign, designed 
  attract, support and retain                 to provide our colleagues with 
  diverse talent, it may have                 the confidence to speak up and 
  an adverse impact on the Group's            raise concerns when they witness 
  ability to                                  or suspect inappropriate behaviour, 
  deliver its strategic objectives            misconduct or wrongdoing that 
  and its reputation.                         conflicts with our values. 
  Whilst our preparations are                 Career development remains a 
  comprehensive in relation to                key enabler for success, and 
  Brexit, a common risk across                we have a carefully managed learning 
  the Group is the uncertainty                and development programme which 
  surrounding the status of the               enables us to focus on providing 
  EU citizens in the UK and UK                colleagues with a range of courses, 
  citizens in the EU.                         materials and tools to support 
  Pandemics represent a potential             their development. 
  threat to employee health and               We strive to inspire diverse 
  wellbeing.                                  talent to pursue careers at LSEG 
  Please see also Supporting sustainable      and encourage industry-wide change 
  growth for details regarding                to increase equal opportunity 
  employee matters and Corporate              for all, across every part of 
  Governance for information about            LSEG. We support diversity and 
  Workforce Engagement                        have established targets for 
                                              female representation at senior 
                                              management level and overall 
                                              as well as having signed the 
                                              Women in Finance Charter. 
                                              Performance management plays 
                                              a key role in mitigating retention 
                                              and performance risk at LSEG, 
                                              and the Group has in place a 
                                              robust approach to assess performance 
                                              against financial objectives, 
                                              strategic deliverables, and the 
                                              extent to which colleagues role 
                                              model the Group's values and 
                                              behaviours. 
                                              We also regularly benchmark our 
                                              reward, benefits and incentive 
                                              systems to ensure they are competitive. 
                                              LSEG continuously engages with 
                                              the EU and the UK regulators 
                                              to minimise the impact of Brexit 
                                              on our colleagues. 
                                              The Group adopts preventative 
                                              critical monitoring and contingency 
                                              arrangements to manage potential 
                                              threats such as pandemics. 
                                           ------------------------------------------------  ----------- 
 For more information, see Supporting sustainable growth on pages 40-50 
  and Remuneration Report on pages 98-128. 
 

EMERGING RISKS

Risks which are new to the Group or which are difficult to quantify due to their remote or evolving nature.

 
 Risk Description                              Mitigation                                   Risk level 
 Climate-related Risk                           We support consistent global                Increasing 
  (Executive Lead: Group Corporate               standards and encourage continued 
  Sustainability Committee)                      alignment between the EU and 
  International organisations,                   UK on sustainable finance. We 
  governments and regulators are                 have been members of the EU High 
  focused on integrating climate                 Level Expert Group and the Technical 
  risks and opportunities into                   Expert Group, and the FCA/PRA 
  investment decision making,                    Climate Financial Risk Forum. 
  to enable transition to a low                  To further align with the TCFD 
  carbon economy. This is an area                recommendations, the Group has 
  of emerging and wide-ranging                   developed climate-related risks 
  policy making, impacting financial             scenario over both the medium 
  market participants and corporates.            and longer term, and how these 
  The increased focus from regulators,           may impact credit, operational, 
  investors and other stakeholders,              market and liquidity risks. 
  has generated a requirement                    In line with increased disclosure 
  for enhanced climate-related                   requirements for corporations 
  risk oversight. Climate-related                and financial markets participants, 
  risks include Transition risks,                LSEG has taken proactive steps 
  Litigation risks and Physical                  to develop its methodology to 
  risks (further information is                  define and model how climate 
  provided under Physical Threats                change impacts its businesses. 
  risk).                                         The aim is to reinforce the Group's 
  With respect to this, it is                    resilience to acute physical 
  acknowledged that although climate-related     risks today and chronic physical 
  risks have been categorised                    risks in the future, and to address 
  as an emerging risk, they are                  transition risks, to be aligned 
  inherently linked to other strategic,          with the Task Force on Climate-related 
  financial and operational risks,               Financial Disclosures (TCFD) 
  as well as commercial opportunities.           recommendations, be prepared 
  Please see also Supporting sustainable         for potential future mandatory 
  growth for details regarding                   reporting requirements and to 
  Corporate Sustainability.                      protect the Group's reputation 
                                                 - See the TCFD disclosures section 
                                                 under Supporting Sustainable 
                                                 Growth for more information. 
                                                 To further align with the TCFD 
                                                 recommendations, the Group has 
                                                 developed climate-related risk 
                                                 scenarios over both the medium 
                                                 and longer term, to help identify 
                                                 how these scenarios may impact 
                                                 credit, operational, market and 
                                                 liquidity risks using the most 
                                                 material physical and transition 
                                                 risks for the business. 
                                                 From the review of published 
                                                 climate scenarios, two scenarios 
                                                 from the International Energy 
                                                 Agency World Energy Outlook have 
                                                 been selected for transition 
                                                 risk, and for physical risk, 
                                                 two scenarios from the Intergovernmental 
                                                 Panel on Climate Change are considered 
                                                 most appropriate. These scenarios 
                                                 cover a <2 degree 
                                                 and 3-4 degree scenario, over 
                                                 both the medium (2025-2035) and 
                                                 longer (2050) term. 
                                                 Looking ahead, we plan to continue 
                                                 to integrate climate risk into 
                                                 our existing risk management 
                                                 frameworks. 
                                              -------------------------------------------  ----------- 
 More information on our environmental management can be found in the 
  supporting sustainable growth section of this report on pages 47-49. 
 Emerging Technology                            The Group continues to maintain             Increasing 
  (Executive Lead: Chief Information             systems and controls to mitigate 
  Officer)                                       the risk resulting from emerging 
  The increased integrated artificial            technology. Risk arising from 
  intelligence (AI) in digital                   the Group's use of AI is identified, 
  transformation strategies brings               assessed, managed and reported 
  with it associated risks such                  through the current ERMF. We 
  as inherent bias in the historical             align with industry best practices 
  data and behaviour patterns                    and guidance when considering 
  which feed AI algorithms. This                 the trustworthiness and bias 
  may give rise to automated decisions           in AI systems and AI aided decision 
  which are not aligned with current             making. The Group ensures the 
  societal expectations or organisational        use of AI is fair, explainable 
  values. AI use by cyber hackers                and transparent, secure and safe. 
  can also render cyber security                 The continuous development of 
  defence and detective mechanisms               AI has the potential to impact 
  ineffective.                                   industry behaviour and our business, 
  Regulators are considering the                 we will continue to monitor and 
  application of existing or new                 manage this risk closely. 
  frameworks to manage the development 
  of innovative financial services 
  technologies, which are important 
  for maintaining the resilience 
  and stability in the market 
  and allowing innovation with 
  emerging technology. 
                                              -------------------------------------------  ----------- 
 

Financial Risk Management

The Group seeks to protect its financial performance and the value of its business from exposure to capital, credit, concentration, country, liquidity, settlement, custodial and market (including foreign exchange, cash flow and fair value interest rate) risks.

The Group's financial risk management approach is not speculative and adopts a '3 lines of defence' model. It is performed both at a Group level, where the treasury function identifies, evaluates and hedges financial risks from a Group perspective and locally, where operating units manage their regulatory and operational risks. This includes clearing operations at the Group's CCPs (CC&G and LCH Group) that adhere to local regulation and operate under approved risk and investment policies.

The Group Chief Risk Officer's team provides assurance that the governance and operational controls are effective to manage risks within the Board-approved risk appetite, supporting a robust Group risk management framework. The Financial Risk Committee, a sub-committee of the Group Executive Committee and chaired by the Chief Financial Officer, meets at least quarterly to oversee the consolidated financial risks of the Group. In addition, the Treasury Committee, a sub-committee of the Financial Risk Committee (which is also chaired by the Chief Financial Officer), meets regularly to monitor the management of, and controls around foreign exchange, interest rate, credit and concentration risks and the investment of excess liquidity in addition to its oversight of the Group's funding arrangements and credit ratings. Both committees provide the Group's senior management with assurance that the treasury and risk operations are performed in accordance with Group Board approved policies and procedures. Regular updates, on a range of key criteria as well as new developments, are provided through the Enterprise-Wide Risk

Management Framework to the Group Risk Committee. See 'Risk Management Oversight Supplement' for further detail on the Group's risk framework on our website at: www.lseg.com/about-london-stockexchange-group/risk-management-oversight.

The UK's exit from the EU leaves significant uncertainty concerning the political and regulatory environment, the UK's future relationship with the EU, and the overall impact on the UK and EU economies both in the short and medium term. The UK companies within the Group, as members of the EU or European Economic Area (EEA), rely on a number of rights that are available to them to conduct business with other EU or EEA members. This includes, without limitation, the right for UK CCPs to offer clearing services to EU regulated firms under EMIR, and the right for UK trading venues to offer services to members in the EU or EEA. The Group companies have analysed the potential impacts and considered contingency plans that they may choose to execute should these rights not be replaced by rights that persist outside EU membership. The European Commission published in the Official Journal on 23 December 2019 an extension of temporary equivalence for UK CCPs for another twelve months, confirming LCH Ltd's ability to continue to offer all clearing services for all products and services to all members and clients after 31 January 2020 even under a no-deal Brexit scenario.

Capital risk

 
 Risk description                               Risk management approach 
 The Group is profitable and strongly           The Group focuses upon its overall 
  cash generative                                cost of capital as it seeks, within 
  and its capital base comprises equity          the scope of its risk appetite, to 
  and debt capital.                              provide 
  However, the Group recognises the              superior returns to its shareholders, 
  risk that its entities                         fulfil its obligations to the relevant 
  may not maintain sufficient capital            regulatory authorities and other stakeholders 
  to meet their obligations or they              and ensure that it is not overly dependent 
  may make investments that fail to              upon short and medium term debt that 
  generate a positive or value enhancing         might not be 
  return.                                        available at renewal. Maintaining 
  The Group comprises regulated and              the flexibility to invest for growth 
  unregulated entities. It considers             is a key capital management consideration. 
  that:                                          The Group can manage its capital structure 
  --increases in the capital requirements        and react to changes in economic conditions 
  of its regulated                               by varying returns to shareholders, 
  companies, or                                  issuing new shares or increasing or 
  --negative yields on its investments           reducing borrowings. The Board reviews 
  of cash, or                                    dividend policy 
  --a scarcity of debt or equity (driven         and funding capacity on a regular 
  by its own                                     basis and the Group maintains comfortable 
  performance or financial market conditions)    levels of debt facility headroom. 
  either separately or in combination            A summary of the Group's capital structure 
  are the principal                              is presented below:                        2019    2018 
  risks to managing its capital.                  Book value             GBPm    GBPm 
                                                   of capital 
                                                                        ------  ------ 
                                                  Total shareholders' 
                                                   funds                 3,455   3,343 
                                                                        ------  ------ 
                                                  Group consolidated 
                                                   debt                  2,085   2,203 
                                                                        ------  ------ 
 
                                                 Whilst the Company is unregulated, 
                                                 the regulated entities within the 
                                                 Group monitor compliance with the 
                                                 capital requirements set by their 
                                                 respective competent authorities and 
                                                 the terms of reference of the Financial 
                                                 Risk Committee includes oversight 
                                                 of the Group's Capital Management 
                                                 Policy. The Capital Management Policy 
                                                 seeks to ensure that capital is allocated 
                                                 optimally in order to maintain a prudent 
                                                 balance sheet and meet regulatory 
                                                 requirements, drive growth and offer 
                                                 suitable returns to shareholders. 
                                                 Regulated entities within the Group 
                                                 have to date predominantly issued 
                                                 equity and held cash to satisfy their 
                                                 local regulatory capital requirements. 
                                                 We believe that capital held by Group 
                                                 companies is sufficient to comfortably 
                                                 support current regulatory frameworks. 
                                                 Whilst the level of amounts set aside 
                                                 for these purposes remains subject 
                                                 to ongoing review with 
                                                 regulators, particularly in Europe, 
                                                 total capital amounts are broadly 
                                                 in line year on year reflecting a 
                                                 relatively settled regulatory backdrop 
                                                 for the Group in 2019. The aggregate 
                                                 of the Group's regulatory and operational 
                                                 capital is shown below: 
                                                                       2019    2018 
                                                  Regulatory           GBPm    GBPm 
                                                   and Operational 
                                                   Capital 
                                                                      ------  ------ 
                                                  Total regulatory 
                                                   and operational 
                                                   capital             1,231   1,203 
                                                                      ------  ------ 
                                                  Amount included 
                                                   in cash and 
                                                   cash equivalents    1,125   1,120 
                                                                      ------  ------ 
                                                 To maintain the financial strength 
                                                 to access new capital at reasonable 
                                                 cost and sustain an investment grade 
                                                 credit rating, the Group monitors 
                                                 its net leverage ratio which is operating 
                                                 net debt (i.e. net debt after excluding 
                                                 cash and cash equivalents set aside 
                                                 for regulatory and operational purposes) 
                                                 to proforma adjusted EBITDA (Group 
                                                 consolidated earnings before net finance 
                                                 charges, taxation, impairment, depreciation 
                                                 and amortisation, foreign exchange 
                                                 gains or losses and non--underlying 
                                                 items, prorated for acquisitions or 
                                                 disposals undertaken in the period) 
                                                 against a target range of 1-2 times. 
                                                 The Group is also mindful of potential 
                                                 impacts on the key metrics employed 
                                                 by the credit rating agencies in considering 
                                                 increases to its borrowings. The Group 
                                                 seeks to maintain a strong investment 
                                                 grade credit rating over time and 
                                                 will therefore employ a credible plan 
                                                 to return to its target range in the 
                                                 event leverage rises temporarily due 
                                                 to a debt funded major investment. 
                                                 As at 31 December 2019, net leverage 
                                                 was 1.4 times (2018: 1.8 times) and 
                                                 remains well within the Group's target 
                                                 range. The Group is comfortably in 
                                                 compliance with its bank facility 
                                                 ratio covenants (net leverage and 
                                                 interest cover) and these measures 
                                                 do not inhibit the Group's operations 
                                                 or its financing plans. 
                                               --------------------------------------------------------- 
 

Credit and concentration risk

 
 Risk description                            Risk management approach 
 The Group's credit risk relates to          Group 
  its customers and counterparties being      Credit risk is governed through policies 
  unable to meet their obligations to         developed at a Group level. Limits 
  the Group either in part or in full,        and thresholds for credit and concentration 
  including:                                  risk are kept under review. 
  --customer receivables,                     Group companies make a judgement on 
  --repayment of invested cash and cash       the credit quality of their customers 
  equivalents, and                            based upon the customer's financial 
  --settlement of derivative financial        position, the recurring nature of 
  instruments.                                billing and collection arrangements 
  In their roles as CCP clearers to           and, historically, a low incidence 
  financial market participants, the          of default. The Group is exposed to 
  Group's CCPs guarantee final settlement     a large number of customers and so 
  of transactions acting as buyer towards     concentration risk on its receivables 
  each seller and as seller towards           is deemed low by management. The Group's 
  each buyer. They manage substantial         credit risk is equal to the total 
  credit risks as part of their operations    of its financial assets as shown in 
  including unmatched risk positions          note 19. No estimated credit losses 
  that might arise from the default           have been recognised on other financial 
  of a party to a cleared transaction.        instruments and there have been no 
  For more information see 'Principal         significant increases in credit risk 
  Risks and Uncertainties', pages 60          for these assets. 
  to 73.                                      Non --CCP entities 
  Notwithstanding regulations that require    Credit risk associated with cash and 
  CCPs to invest predominantly in secured     cash equivalents is managed by limiting 
  instruments or structures (such as          exposure to counterparties with credit 
  government bonds and reverse repos),        rating levels below policy minimum 
  CC&G and the LCH Group CCPs are able        thresholds, potentially overlaid by 
  to maintain up to 5% of their total         a default probability assessment. 
  deposits at commercial banks on an          Except where specific approval is 
  unsecured basis. Through this potential     arranged to increase this limit for 
  for its CCPs to invest on an unsecured      certain counterparties, investment 
  basis (as well as by certain other          limits of between GBP25 million and 
  regulated and unregulated operations        GBP100 million apply for periods ranging 
  observing agreed investment policy          between a week and 12 months, depending 
  limits), the Group may continue to          on counterparty credit rating and 
  face some risk of direct loss from          default probability risk. Derivative 
  a deterioration or failure of one           transactions and other treasury receivable 
  or more of its unsecured investment         structures are undertaken or agreed 
  counterparties.                             with well--capitalised counterparties 
  Concentration risk may arise through        and are authorised by policy to limit 
  Group entities having large individual      the credit risk underlying these transactions. 
  or connected exposures to groups of         CCPs 
  counterparties whose likelihood of          To address market participant and 
  default is driven by common underlying      latent market risk, the Group's CCPs 
  factors. This is a particular focus         have established financial safeguards 
  of the investment approach at the           against single or multiple defaults. 
  Group's CCPs.                               Clearing membership selection is based 
                                              upon supervisory capital, technical 
                                              and organisational criteria. Each 
                                              member must pay margins, computed 
                                              and collected at least daily, to cover 
                                              the exposures and theoretical costs 
                                              which the CCP might incur in order 
                                              to close out open positions in the 
                                              event of the member's default. Margins 
                                              are calculated using established and 
                                              internationally acknowledged risk 
                                              models and are debited from participants' 
                                              accounts through central bank accounts 
                                              and via commercial bank payment systems. 
                                              Minimum levels of cash collateral 
                                              are required. Non--cash collateral 
                                              is revalued daily. 
                                              Clearing members also contribute to 
                                              default funds managed by the CCPs 
                                              to guarantee the integrity of the 
                                              markets in the event of multiple defaults 
                                              in extreme market circumstances. Amounts 
                                              are determined on the basis of the 
                                              results of periodic stress testing 
                                              examined by the risk committees of 
                                              the respective CCPs. Furthermore, 
                                              each of the Group's CCPs reinforces 
                                              its capital position to meet the most 
                                              stringent relevant regulatory requirements 
                                              applicable to it, including holding 
                                              a minimum amount of dedicated own 
                                              resources to further underpin the 
                                              protective credit risk framework in 
                                              the event of a significant market 
                                              stress event or participant failure. 
                                              An analysis of the aggregate clearing 
                                              member contributions of margin and 
                                              default funds across the CCPs is shown 
                                              below: 
                                               Total collateral                      2019    2018 
                                                held 
                                                                                    GBPbn   GBPbn 
                                                                  ---------------  ------  ------ 
                                               Collateral 
                                                security           Cash received       93      81 
                                                                  ---------------  ------  ------ 
                                                Non--cash 
                                                 pledged                              115      92 
                                               ----------------------------------  ------  ------ 
                                                Guarantees 
                                                 pledged                                4       2 
                                               ----------------------------------  ------  ------ 
                                               Total collateral 
                                                as at 31 
                                                December 
                                                2019                                  212     175 
                                                                                   ------  ------ 
                                               Maximum 
                                                collateral 
                                                held during 
                                                the year                              242     181 
                                                                                   ------  ------ 
                                              Investment counterparty risk for CCP 
                                              margin and default funds is managed 
                                              by investing the cash element in instruments 
                                              or structures deemed 'secure' by the 
                                              relevant regulatory bodies including 
                                              through direct investments in highly 
                                              rated, 'regulatory qualifying' sovereign 
                                              bonds and supra--national debt, investments 
                                              in 
                                              tri--party and bilateral reverse repos 
                                              (receiving high--quality government 
                                              securities as collateral) and, in 
                                              certain jurisdictions, deposits with 
                                              the central bank. The small proportion 
                                              of cash that is invested unsecured 
                                              is placed for short durations with 
                                              highly rated counterparties where 
                                              strict limits are applied with respect 
                                              to credit quality, concentration and 
                                              tenor. 
                                                                             2019    2018 
                                                                             GBPbn   GBPbn 
                                                                            ------  ------ 
                                               Total investment portfolio    85      94 
                                                                            ------  ------ 
                                               Maximum portfolio size 
                                                during the year              122     103 
                                                                            ------  ------ 
                                               Additional portfolio information: 
                                               Amount invested securely      100%    98% 
                                                                            ------  ------ 
                                               Weighted average maturity 
                                                (days)                       90      49 
                                                                            ------  ------ 
                                              Associated liquidity risks are considered 
                                              in the investment mix and discussed 
                                              further below. 
                                              To address concentration risk, the 
                                              Group maintains a diversified portfolio 
                                              of high--quality, liquid investments 
                                              and uses a broad range of custodians, 
                                              payment and settlement banks and agents. 
                                              The largest concentration 
                                              of treasury exposures as at 31 December 
                                              2019 was 17% of the total investment 
                                              portfolio to the French Government 
                                              (2018: 17% to the French Government). 
                                              Trade and fees receivable 
                                              An impairment analysis is performed 
                                              monthly using a provision matrix to 
                                              measure expected credit losses on 
                                              trade and fees receivable. The calculation 
                                              reflects current conditions and forecasts 
                                              of future economic conditions. None 
                                              of the Group's trade receivables are 
                                              material by individual counterparty. 
                                               At 31           Fees          <180    >180    Total 
                                                December        receivable    days    days    GBPm 
                                                2019            GBPm          GBPm    GBPm 
                                               Expected 
                                                credit 
                                                loss rate          <1%        <1%     46% 
                                                              ------------  ------  ------  ------ 
                                               Total 
                                                receivables        141        310     16      467 
                                                              ------------  ------  ------  ------ 
                                               Expected 
                                                credit 
                                                loss                -         (2)     (7)     (9) 
                                                              ------------  ------  ------  ------ 
                                                                   141        308      9      458 
                                                              ------------  ------  ------  ------ 
 
                                               At 31              Fees       <180    >180    Total 
                                                December        receivable    days    days    GBPm 
                                                2018               GBPm       GBPm    GBPm 
                                                              ------------  ------  ------  ------ 
                                               Expected 
                                                credit 
                                                loss rate          <1%        <1%     19% 
                                                              ------------  ------  ------  ------ 
                                               Total 
                                                receivables        139        380     52      571 
                                                              ------------  ------  ------  ------ 
                                               Expected 
                                                credit 
                                                loss                -         (1)    (10)    (11) 
                                                              ------------  ------  ------  ------ 
                                                                   139        379     42      560 
                                                              ------------  ------  ------  ------ 
                                            ------------------------------------------------------ 
 

Country risk

 
 Risk description                           Risk management approach 
 Distress can result from the risk          Specific risk frameworks manage country 
  that certain governments may be unable     risk for both fixed income clearing 
  or find it difficult to service their      and margin collateral and all clearing 
  debts. This could have adverse effects,    members' portfolios are monitored 
  particularly on the Group's CCPs,          regularly against a suite of sovereign 
  potentially impacting cleared products,    stress scenarios. Investment limits 
  margin collateral, investments, the        and counterparty and clearing membership 
  clearing membership and the financial      monitoring are sensitive to changes 
  industry as a whole.                       in ratings and other financial market 
                                             indicators, to ensure the Group's 
                                             CCPs are able to measure, monitor 
                                             and mitigate exposures to sovereign 
                                             risk and respond quickly to anticipated 
                                             changes. Risk Committees maintain 
                                             an ongoing watch over these risks 
                                             and the associated policy frameworks 
                                             to protect the Group against potentially 
                                             severe volatility in the sovereign 
                                             debt markets. 
                                             The Group's sovereign exposures of 
                                             GBP1 billion or more at the end of 
                                             either of the financial reporting 
                                             periods shown 
                                             below were: 
                                              Group Aggregate        2019    2018 
                                               Sovereign Treasury 
                                               Exposures 
                                              Country                GBPbn   GBPbn 
                                                                    ------  ------ 
                                              France                  18      16 
                                                                    ------  ------ 
                                              USA                     12       9 
                                                                    ------  ------ 
                                              Italy                   11       2 
                                                                    ------  ------ 
                                              EU                      10       3 
                                                                    ------  ------ 
                                              UK                       6       4 
                                                                    ------  ------ 
                                              Spain                    1       - 
                                                                    ------  ------ 
                                              Netherlands              -       7 
                                                                    ------  ------ 
                                              Switzerland              -       3 
                                                                    ------  ------ 
                                              Germany                  -       1 
                                                                    ------  ------ 
                                           ------------------------------------------ 
 

Liquidity, settlement and custodial risk

 
 Risk description                                 Risk management approach 
  The Group's operations are exposed              Group 
   to liquidity risk to the extent that            The combined Group businesses are 
   they are unable to meet their daily             profitable, generate strong free 
   payment obligations.                            cash flow and operations are not 
   In addition, the Group's CCPs and               significantly impacted by seasonal 
   certain other Group companies must              variations. The Group maintains sufficient 
   maintain a level of liquidity (consistent       liquid resources to meet its financial 
   with regulatory requirements) to                obligations as they fall due and 
   ensure the smooth operation of their            to invest in capital expenditure, 
   respective markets and to maintain              make dividend payments, meet its 
   operations in the event of a single             pension commitments, appropriately 
   or multiple market stress event or              support or fund acquisitions or repay 
   member failure. This includes the               borrowings. Subject to regulatory 
   potential requirement to liquidate              constraints impacting certain entities, 
   the position of a clearing member               funds can generally be lent across 
   under a default scenario including              the Group and cash earnings remitted 
   covering the associated losses and              through regular dividend payments 
   the settlement obligations of the               by local companies. This is an important 
   defaulting member.                              component of the Group Treasury cash 
   The Group is exposed to the risk                management policy and approach. 
   that a payment or settlement bank               Management monitors forecasts of 
   could fail or that its systems encounter        the Group's cash flow and overlays 
   operational issues, creating liquidity          sensitivities to these forecasts 
   pressures and the risk of possible              to reflect assumptions about more 
   defaults on payment or receivable               difficult market conditions or stress 
   obligations.                                    events. The Group will take the appropriate 
   The Group uses third--party custodians          actions to satisfy working capital 
   to hold securities and is therefore             requirements when committing to large 
   exposed to the custodian's insolvency,          scale acquisitions, including comfortable 
   its negligence, a misuse of assets              liquidity headroom projected over 
   or poor administration.                         a reasonable timeframe. 
                                                   Non --CCP entities 
                                                   Treasury policy requires that the 
                                                   Group maintains adequate credit facilities 
                                                   provided by a diversified lending 
                                                   group to cover its expected funding 
                                                   requirements and ensure a minimum 
                                                   level of headroom for at least the 
                                                   next 24 months. The financial strength 
                                                   of lenders to the Group is monitored 
                                                   regularly. 
                                                   During the year ended 31 December 
                                                   2019, to improve its debt maturity 
                                                   profile, the Group approached its 
                                                   lenders to further extend the maturity 
                                                   of its 2017 arranged, five year, 
                                                   GBP600 million committed revolving 
                                                   credit facility by another year to 
                                                   2024. To diversify and maintain its 
                                                   liquidity sources the Group continued 
                                                   to issue Euro commercial paper under 
                                                   its GBP1 billion programme, with 
                                                   EUR300 million in issuance at the 
                                                   end of the financial period (2018: 
                                                   EUR300 million). At 31 December 2019, 
                                                   GBP934 million (2018: GBP1,159 million) 
                                                   of the Group's bank facilities were 
                                                   unutilised, with circa GBP250 million 
                                                   having been drawn to repay the Group's 
                                                   2009 issued Bond which matured in 
                                                   the year. Facilities also provide 
                                                   swingline backstop coverage for the 
                                                   EUR300 million Euro commercial paper 
                                                   in issuance. 
                                                   During the year, LSEG also arranged 
                                                   a Bridge Facility to facilitate a 
                                                   potential refinancing as it completes 
                                                   the acquisition of Refinitiv, announced 
                                                   on 1 August 2019. The facility is 
                                                   committed and structured with a US$9,325 
                                                   million tranche and a EUR3,580 million 
                                                   tranche to provide funding capacity 
                                                   to precisely match the debt the Group 
                                                   will take on when the acquisition 
                                                   completes. 
                                                   CCPs 
                                                   The Group's CCPs maintain sufficient 
                                                   cash and cash equivalents and, in 
                                                   certain jurisdictions, have access 
                                                   to 
                                                   central bank refinancing or commercial 
                                                   bank liquidity support credit lines 
                                                   to meet the cash requirements of 
                                                   the clearing and settlement cycle. 
                                                   Revised regulations require CCPs 
                                                   to ensure that appropriate levels 
                                                   of back--up liquidity are in place 
                                                   to underpin the dynamics of a largely 
                                                   secured cash investment requirement, 
                                                   ensuring that the maximum potential 
                                                   outflow under extreme market conditions 
                                                   is covered (see credit and concentration 
                                                   risk section above). The Group's 
                                                   CCPs monitor their liquidity needs 
                                                   daily under normal and stressed market 
                                                   conditions. 
                                                   Where possible, the Group employs 
                                                   guaranteed delivery versus payment 
                                                   settlement techniques and manages 
                                                   CCP margin and default fund flows 
                                                   through central bank or long--established, 
                                                   bespoke commercial bank settlement 
                                                   mechanisms. Monies due from clearing 
                                                   members remain the clearing members' 
                                                   liability if the payment agent is 
                                                   unable to effect the appropriate 
                                                   transfer. In addition, certain Group 
                                                   companies, including 
                                                   the CCPs, maintain operational facilities 
                                                   with commercial banks to manage intraday 
                                                   and overnight liquidity. 
                                                   Custodians are subject to minimum 
                                                   eligibility requirements, ongoing 
                                                   credit assessment, robust contractual 
                                                   arrangements and are required to 
                                                   have appropriate back--up contingency 
                                                   arrangements in place. 
                                                   The table below analyses the Group's 
                                                   financial liabilities into relevant 
                                                   maturity groupings based on the remaining 
                                                   period from the balance sheet date 
                                                   to the contractual maturity date. 
                                                   The amounts disclosed in the table 
                                                   reflect the contractual undiscounted 
                                                   cash flows. The borrowings line includes 
                                                   future interest on debt that is not 
                                                   accrued for in relation to bonds 
                                                   that are not yet due. 
                                                 --------------------------------------------------- 
 As at 31 December                    Less than       Between 1       Between 2    Over 5      Total 
  2019                                   1 year       & 2 years       & 5 years     years 
---------------------------------  ------------  --------------  --------------  --------  --------- 
                                           GBPm            GBPm            GBPm      GBPm       GBPm 
 Borrowings                                 529             333             483       914      2,259 
 Trade & other payables 
  (excluding lease 
  liabilities)                              560               -               -         -        560 
 Lease liabilities                           39              41              90        36        206 
 Clearing member business 
  liabilities                           796,102               -               -         -    796,102 
 Derivative financial 
  instruments                                 1               -              30         9         40 
 Other non-current 
  liabilities 
  (excluding lease 
  liabilities)                                -               4               -         -          4 
---------------------------------  ------------  --------------  --------------  --------  --------- 
                                        797,231             378             603       959    799,171 
 
 As at 31 December                    Less than       Between 1       Between 2    Over 5      Total 
  2018                                   1 year       & 2 years       & 5 years     years 
                                           GBPm            GBPm            GBPm      GBPm       GBPm 
 Borrowings                                 601              34             373     1,435      2,443 
 Trade & other payables                     509               -               -         -        509 
 Clearing member business 
  liabilities                           835,508               -               -         -    835,508 
 Derivative financial 
  instruments                                30               -               -        17         47 
 Other non-current 
  liabilities                                 -               7               3         1         11 
---------------------------------  ------------  --------------  --------------  --------  --------- 
                                        836,648              41             376     1,453    838,518 
---------------------------------  ------------  --------------  --------------  --------  --------- 
 
 

Market Risk - Foreign Exchange

 
 Risk description                      Risk management approach 
  The Group operates primarily in       The Group seeks to match the currency 
  the                                    of its debt liabilities to the currency 
  UK, Europe and North America, but      of its earnings and cash flows which, 
  also has growing and strategically     to an extent, protects its key ratios 
  important businesses in Asia, and      (net leverage and interest coverage) 
  other alliances and investments        and balances the currency of its assets 
  across                                 with its liabilities. In order to 
  the globe. Its principal               mitigate the impact of unfavourable 
  currencies                             currency exchange rate movements on 
  of operation are Sterling, Euro        earnings and net assets, non--Sterling 
  and                                    cash earnings are centralised and 
  US dollars.                            applied to matching currency debt 
  Group companies generally invoice      and interest payments, and, where 
  revenues, incur expenses and           relevant, interest payments on Sterling 
  purchase                               debt re--denominated through the use 
  assets in their respective local       of cross--currency swaps. 
  currencies.                            A material proportion of the Group's 
  As a result, foreign exchange risk     debt is held in or swapped into Euros 
  arises mainly from the translation     and US dollars as noted below.                      31 December   31 December 
  of the Group's foreign currency                                     2019          2018 
  earnings,                               Currency                    GBPm          GBPm 
  assets and liabilities into its          of debt 
  reporting                                                   ------------  ------------ 
  currency, Sterling, and from            Euro- denominated 
  occasional,                              drawn debt                1,557         1,631 
  high value intragroup                                       ------------  ------------ 
  transactions.                           Euro- denominated 
  Exceptions exist including at            cross-currency 
  MillenniumIT                             interest 
  (a Sri Lankan Rupee reporting            rate swaps                (637)         (361) 
  entity)                                                     ------------  ------------ 
  which invoices a material               US Dollar-                   107             - 
  proportion                               denominated 
  of its revenues in US dollars, and       drawn debt 
  at certain operations of the LCH                            ------------  ------------ 
  Group                                   US Dollar 
  (a Euro reporting subsidiary),           denominated 
  which                                    cross - currency 
  generate material revenues in            interest 
  Sterling                                 rate swaps                  637           631 
  and US dollars and incur material                           ------------  ------------ 
  costs in Sterling. 
  Intragroup dividends and the           During the year, the Group settled 
  currency                               maturing Euro--denominated cross--currency 
  debt interest obligations of the       interest rate swaps linked to the 
  Company                                maturity of its 2009 issued GBP250 
  may create short--term                 million bond. Therefore, at the end 
  transactional                          of the year, the remaining cross--currency 
  FX exposures but play their part       interest rate swaps are directly linked 
  in                                     to Euro fixed debt. The Euro and US 
  controlling the level of               dollar denominated debt, including 
  translational                          the cross--currency swaps, provides 
  FX exposures the Group faces.          a hedge against the Group's net investment 
  The Group may be exposed from time     in Euro and US dollar denominated 
  to time to FX risk associated with     entities. 
  strategic investments in, or           As at 31 December 2019, the Group's 
  divestments                            designated hedges of its net investments 
  from, operations denominated in        were fully effective. 
  currencies                             Whilst transactional foreign exchange 
  other than Sterling.                   exposure is limited, the Group hedges 
                                         material transactions in accordance 
                                         with Group Treasury policy (which 
                                         requires cash flows of single transactions 
                                         or a series of linked transactions 
                                         of more than GBP5 million or equivalent 
                                         per annum to be hedged) with appropriate 
                                         derivative instruments or by settling 
                                         currency payables or receivables within 
                                         a short timeframe. Where appropriate, 
                                         hedge accounting for derivatives is 
                                         considered in order to mitigate material 
                                         levels of income statement volatility. 
                                         In addition to projecting and analysing 
                                         its earnings and debt profile by currency, 
                                         the Group reviews sensitivities to 
                                         movements in exchange rates which 
                                         are appropriate to market conditions. 
                                         The Group has considered movements 
                                         in the Euro and the US dollar over 
                                         the year ended 31 December 2019 and 
                                         year ended 31 December 2018 and, based 
                                         on actual market observations between 
                                         its principal currency pairs, has 
                                         concluded that a 10% movement in rates 
                                         is a reasonable level to illustrate 
                                         the risk to the Group. The impact 
                                         on post tax profit and equity for 
                                         the years ended 31 December is set 
                                         out in the table below: 
                                      -------------------------------------------------------------------------------- 
 
 
                                                                              2019 2018 
                                                                              Post tax profit Equity Post tax profit 
                                                                              Equity 
                                                                              GBPm GBPm GBPm GBPm 
                                                                              Euro Sterling weaken - 5 (2) (16) 
                                                                              Sterling strengthen - (5) 2 15 
 
                                                                              US Dollar Sterling weaken (4) (55) 7 
                                                                              (45) 
                                                                              Sterling strengthen 4 50 (7) 41 
 
                                                                              This reflects foreign exchange gains or 
                                                                              losses on translation of Euro 
                                                                              and US dollar denominated financial 
                                                                              assets and financial liabilities, 
                                                                              including Euro and US dollar denominated 
                                                                              cash and borrowings. 
 
                                                                              The impact on the Group's operating 
                                                                              profit for the year before amortisation 
                                                                              of purchased intangible assets and non 
                                                                              -- underlying items, of a 10 Euro 
                                                                              cent and 10 US dollar cent movement in 
                                                                              the Sterling -- Euro and Sterling 
                                                                              -- US dollar rates respectively, can be 
                                                                              seen below: 
 
                                                                              31 December 2019 31 December 2018 
                                                                              GBPm GBPm 
                                                                              Euro Sterling weaken 32 27 
                                                                              Sterling strengthen (27) (23) 
 
                                                                              US Dollar Sterling weaken 37 31 
                                                                              Sterling strengthen (31) (27) 
 
 

Market risk - Cash Flow and Fair Value Interest Rate Risk

 
 Risk Description                                 Risk management approach 
  The Group's interest rate risk arises            Group interest rate management policy 
   through the impact of changes in market          focuses on protecting the Group's 
   rates on cash flows associated with              credit rating and maintaining compliance 
   cash and cash equivalents, investments           with bank covenant requirements. To 
   in financial assets and borrowings               support this objective, a minimum 
   held at floating rates. The Group                coverage of interest expense by EBITDA 
   may also face future interest rate               of 7 times, and a maximum floating 
   exposure connected to                            rate component of 50% of total debt 
   committed M&A transactions where significant     are targeted. This approach reflects: 
   debt financing is involved.                      (i) a focus on the Group's cost of 
   The Group's CCPs face interest rate              gross debt rather than its net debt 
   exposure through the impact of changes           given the material cash and cash equivalents 
   in the reference rates used to calculate         set aside for regulatory purposes; 
   member liabilities versus the yields             (ii) the short duration allowed for 
   achieved through their predominantly             investments of cash and cash equivalents 
   secured investment activities.                   held for regulatory purposes which, 
                                                    by their nature, generate low investment 
                                                    yields; 
                                                    (iii) a view currently maintained 
                                                    that already low market yields are 
                                                    unlikely to move materially lower; 
                                                    and 
                                                    (iv) the broad natural hedge of floating 
                                                    rate borrowings provided by the significant 
                                                    balances of cash and cash equivalents 
                                                    held effectively at floating rates 
                                                    of interest. 
                                                    As at 31 December 2019, consolidated 
                                                    net interest expense cover by EBITDA 
                                                    was measured over the 12--month period 
                                                    at 14.4 times (2018: 16.1 times) and 
                                                    the floating rate component of total 
                                                    debt was 25% (2018: 14%). 
                                                    Where the Group has committed to M&A 
                                                    transactions and is exposed to prospective 
                                                    interest rate risk on borrowings the 
                                                    Group Treasury function will consider 
                                                    the exposure and recommend hedging 
                                                    solutions that conform with policy 
                                                    and seek to limit future interest 
                                                    costs. The acquisition of Refinitiv 
                                                    will meaningfully increase the Group's 
                                                    debt and the interest rate risk exposure 
                                                    was evaluated during the financial 
                                                    period. As at 31 December 2019, no 
                                                    hedging had been arranged but the 
                                                    exposure remains under ongoing review. 
                                                    In the Group's CCPs, interest bearing 
                                                    assets are generally invested in secured 
                                                    instruments or structures and for 
                                                    a longer term than interest bearing 
                                                    liabilities, whose interest rate is 
                                                    reset daily. This makes investment 
                                                    revenue vulnerable to volatility in 
                                                    overnight rates and shifts in spreads 
                                                    between overnight and term rates. 
                                                    Interest rate exposures (and the risk 
                                                    to CCP capital) are managed within 
                                                    defined risk appetite parameters against 
                                                    which sensitivities are monitored 
                                                    daily. 
                                                    In its review of the sensitivities 
                                                    to potential movements in interest 
                                                    rates, the Group has considered interest 
                                                    rate volatility over the last year 
                                                    and prospects for rates over the next 
                                                    12 months and has concluded that a 
                                                    1 percentage point upward movement 
                                                    (with a limited prospect of material 
                                                    downward movement) reflects a reasonable 
                                                    level of risk to current rates. At 
                                                    31 December 2019, at the Group level, 
                                                    if interest rates on cash and cash 
                                                    equivalents and borrowings had been 
                                                    1 percentage point higher with all 
                                                    other variables held constant, post 
                                                    tax profit for the year would have 
                                                    been GBP8 million higher (2018: GBP8 
                                                    million higher) mainly as a result 
                                                    of higher interest income on floating 
                                                    rate cash and cash equivalents partially 
                                                    offset by higher interest expense 
                                                    on floating rate borrowings. 
                                                    At 31 December 2019, at the CCP level 
                                                    (in aggregate), if interest rates 
                                                    on the common interest bearing member 
                                                    liability benchmarks of Eonia, Fed 
                                                    Funds and Sonia, for Euro, US dollar 
                                                    and Sterling liabilities respectively, 
                                                    had been 1 percentage point higher, 
                                                    with all other variables held constant, 
                                                    the daily impact on post tax profit 
                                                    for the Group would have been GBP2 
                                                    million lower (2018: GBP2 million 
                                                    lower). This deficit is expected to 
                                                    be recovered as investment yields 
                                                    increase as the portfolio matures 
                                                    and is reinvested. 
                                                 ----------------------------------------------- 
 

The Annual Report contains the following statements regarding responsibility for financial statements on page 133:

"The Directors are responsible for preparing the Annual Report, the Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. The Directors have prepared the Group and Company financial statements in accordance with International Financial Reporting Standards

(IFRSs) as adopted by the European Union and applicable law.

Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of the affairs of the Group and the Company and of the profit or loss for that year.

In preparing those financial statements, the Directors are required to:

- Select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently

- Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information

   -      Make judgements and estimates that are reasonable 

- Provide additional disclosures when compliance with the specific requirements in IFRSs as adopted by the EU is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group and the Company's financial position and financial performance

- State whether the Group and the Company financial statements have been prepared in accordance with IFRSs as adopted by the EU, subject to any material departures disclosed and explained in the financial statements

- Prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Group and the Company will continue in business

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and the Company's transactions and disclose with reasonable accuracy at any time the financial position of the

Company and the Group and to enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006, other applicable laws and regulations, including the requirements of the Listing Rules and the Disclosure Guidance and Transparency Rules, and, as regards the Group financial statements, Article 4 of the IAS Regulation. The Directors are also responsible for safeguarding the assets of the Company and the Group and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information on the Company's website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Overview and Strategic Report sections of the Annual Report on pages 2-73. In particular, the current economic conditions continue to pose a number of risks and uncertainties for the Group and these are set out in Principal Risks and Uncertainties on pages 60-73.

The Financial Risk Management objectives and policies of the Group and the exposure of the Group to capital risk, credit risk, market risk and liquidity risk are discussed on pages 158-163. The Group continues to meet Group and

individual entity capital requirements and day-to-day liquidity needs through the Group's cash resources and available credit facilities. The combined total of committed facilities and bonds issued at 31 December 2019 was GBP2,781 million

(2018: GBP3,103 million) excluding the undrawn Bridge Facility arranged to provide financing capacity relating to the Group's proposed acquisition of the Refinitiv business, with the first maturing in November 2021, described further in the Financial Review on pages 53-59.

The Directors have reviewed the Group's forecasts and projections, taking into account reasonably possible changes in trading performance, which show that the Group has sufficient financial resources. On the basis of this review, and after making due enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

Each of the Directors, whose names and functions are set out on pages 76-78 of this Annual Report confirms that, to the best of their knowledge and belief:

- The Group and the Company financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the Group taken as a whole

- The report of the Directors contained in the Annual Report includes a fair review of the development and performance of the business and the position of the Company and the Group taken as a whole, together with a description of the principal risks and uncertainties that they face

- They consider that the Annual Report and Accounts 2019, taken as a whole, is fair, balanced and understandable and provide the information necessary for shareholders to assess the Group and the Company's performance, business model and strategy

By Order of the Board

Lisa Condron

Group Company Secretary

28 February 2020"

"34. Transactions with Related Parties

Key management compensation

Compensation for Directors of the Company and key personnel who have authority for planning, directing and controlling the Group:

 
                       Period ended            Year ended 
                   31 December 2019      31 December 2018 
                               GBPm                  GBPm 
 Salaries and other short-term 
  benefits                       11                    11 
 Pensions                         1                     1 
 Share based payments            12                    14 
------------------------------  ---  -------------------- 
                                   24                  26 
-------------------------------------  ------------------ 
 
 

Key management compensation relates to the Executive Directors, Group Chair and Executive Committee, who have authority for planning, directing and controlling the Group.

Other directors' interests

One director has a 40.5% (2018: 40.5%) equity interest in Quantile Technologies Limited who are an approved compression service provider for the Group's LCH Limited subsidiary. The Group operated a commercial arrangement with Quantile Technologies Limited and all transactions were carried out on an arm's length basis. During the year the Group recognised income of GBP0.5 million and expenses of GBP0.4 million as part of the agreement (2018: nil).

Inter-company transactions with subsidiary undertakings

The Company has loans with some subsidiary undertakings. Details as at 31 December 2019 are shown in the table below:

 
                     Amount in millions due                                                  Interest (charge)/credit 
                      (owed to)/from as at 
 Loan                  31 December    31December 2018              Term     Interest rate           2019          2018 
 counterparty                 2019                                           as at 31 Dec 
                                                                                     2018 
                  ----------------  -----------------  ----------------  ----------------  -------------  ------------ 
 London Stock            GBP(203)m          GBP(198)m     25 years from     LIBOR plus 2%        GBP(6)m       GBP(5)m 
 Exchange plc                                             May 2006 with         per annum 
                                                             five equal 
                                                                 annual 
                                                             repayments 
                                                          commencing in 
                                                              May 2027. 
                  ----------------  -----------------  ----------------  ----------------  -------------  ------------ 
 London Stock               GBP41m             GBP25m      Repayable on      Non-interest              -             - 
 Exchange                                                       demand.           bearing 
 Employee 
 Benefit Trust 
                  ----------------  -----------------  ----------------  ----------------  -------------  ------------ 
                                                                  Fifth 
 London Stock                                            anniversary of 
  Exchange Group                                            the initial 
  Holdings                                                  utilisation 
  (Italy)                                                date which was      EURIBOR plus 
  Limited                EUR(206)m           EUR(11)m       April 2018.    1.5% per annum        EUR(2)m       EUR(1)m 
                  ----------------  -----------------  ----------------  ----------------  -------------  ------------ 
 London Stock              GBP272m            GBP226m             Fifth        LIBOR plus          GBP9m        GBP12m 
  Exchange Group                                         anniversary of    1.5% per annum 
  Holdings                                                          the 
  Limited                                                       initial 
                                                            utilisation 
                                                                   date 
                                                              which was 
                                                          October 2019. 
                  ----------------  -----------------  ----------------  ----------------  -------------  ------------ 
 London Stock               GBP24m             GBP20m             Fifth        LIBOR plus              -             - 
  Exchange Reg                                           anniversary of    1.2% per annum 
  Holdings                                                          the 
  Limited                                                       initial 
                                                            utilisation 
                                                                   date 
                                                         which was July 
                                                                  2018. 
                  ----------------  -----------------  ----------------  ----------------  -------------  ------------ 
 London Stock             GBP(40)m                  -             Fifth      EURIBOR plus              -             - 
  Exchange (C)                                              anniversary    1.5% per annum 
  Limited                                                of the initial 
                                                            utilisation 
                                                                   date 
                                                          which was May 
                                                                  2017. 
                  ----------------  -----------------  ----------------  ----------------  -------------  ------------ 
 London Stock            US$(227)m           US$(24)m             Fifth      EURIBOR plus        US$(2)m       US$(3)m 
  Exchange Group                                            anniversary    1.5% per annum 
  Holdings                                               of the initial 
  (Luxembourg)                                              utilisation 
  Ltd                                                              date 
                                                              which was 
                                                         November 2019. 
                  ----------------  -----------------  ----------------  ----------------  -------------  ------------ 
 LSEG Employment            GBP34m            GBP137m             Fifth        LIBOR plus          GBP1m         GBP2m 
  Services                                                  anniversary    1.2% per annum 
  Limited                                                of the initial 
                                                            utilisation 
                                                                   date 
                                                              which was 
                                                          January 2015. 
                  ----------------  -----------------  ----------------  ----------------  -------------  ------------ 
 London Stock              GBP197m             GBP71m             Fifth        LIBOR plus          GBP3m         GBP2m 
  Exchange Group                                            anniversary    0.9% per annum 
  (Services)                                             of the initial 
  Limited                                                   utilisation 
                                                                   date 
                                                              which was 
                                                          January 2016. 
                  ----------------  -----------------  ----------------  ----------------  -------------  ------------ 
 

During the year, the Company charged in respect of employee share schemes GBP10 million (2018: GBP9 million) to LSEG Employment Services Limited, GBP6 million (2018: GBP5 million) to LCH Group, GBP4 million (2018: GBP5 million) to the London Stock Exchange Group Holdings Italia S.p.A. group of companies, GBP4 million (2018: GBP3 million) to the FTSE Group, GBP5 million (2018: GBP7 million) to London Stock Exchange Group Holdings Inc, GBP4 million (2018: GBP5 million) to London Stock Exchange plc and GBP2 million (2018: GBP1 million) to other subsidiaries of the Group.

During the year the Company received dividends of GBP218 million from LSE plc, GBP155 million from LSE Group Holdings Ltd, GBP31 million from LSE Group Holdings (Italy) Ltd and GBP60 million from LSEGH (Luxembourg) Ltd. The Company recognised GBP7 million income (2018: GBP7 million) and GBP72 million expenses (2018: GBP61 million) with Group undertakings in relation to corporate recharges. At 31 December 2019, the Company had GBP25 million (2018: GBP67 million) other receivables due from Group companies and other payables of GBP78 million (2018: GBP144 million) owed to Group undertakings.

Transactions with associates

In the year ended 31 December 2019, the Group recognised GBP1 million revenue (2018: GBP1 million) from its associates and as at 31 December 2019, the Group had GBP1 million receivable from its associates (2018: GBP1 million).

All transactions with subsidiaries and associates were carried out on an arm's length basis."

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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