Business process services provider Xchanging may see its flagship IT services contract with the London Metal Exchange (LME) terminated or significantly scaled back over the next twelve months. The news sent Xchanging’s shares down c5%.
Xchanging was at pains to point out that a decision hasn't yet been taken, but it was in discussions with the LME's new owners, the Hong Kong Stock Exchange and Clearing Ltd, to potentially bring the service back in house. Xchanging said this would be a strategic move, rather than because of dissatisfaction with the service being provided.
Xchanging has 12 months’ notice on termination, so it should have time to respond by making cut backs in its Infrastructure Managed Services (IMS) business in which the LME contract sits. It said that the decision - whether to scale back or terminate the deal - wouldn't have an impact on group profitability.
We are on the call with management and will comment further for subscribers later in UK HotViewsExtra.