AGM Statement

London Stock Exchange Plc
13 July 2005


                         London Stock Exchange plc

                          Annual General Meeting

                          Wednesday 13 July 2005


                   Chairman's statement by Chris Gibson-Smith

Today is an opportunity for our shareholders to review the progress of the
company over the last year and to look ahead at its prospects.

It has been an eventful period, certainly since the unsolicited approaches by
Deutsche Borse and Euronext last December. I will cover them later.

But first your company - clearly the pre-eminent equity market in Europe -with
the goal of becoming the world's most highly rated equity exchange business.
Two key strengths will help us achieve this:
     
•    First, the virtuous circle we have created in the London equity market,
     which anticipates and meets customers' needs through innovation in our 
     market and investment in technology, which deepens the liquidity of 
     companies' shares and drives down the cost of trading. This in turn 
     attracts new companies from all around the world and continuously builds 
     our business.

•    Second, our ability to be a force for change and improvement in global
     capital markets, based on our international position in London, the City's
     expertise and its abundant investors, and our reputation as the venue of 
     choice for issuers from around the world.

The result has been a rising trend of trading volumes on our Main Market and
AIM, and more companies than ever raising capital over the past year, together
further strengthening the City of London's position as a global financial
centre.

Let me give you some figures that illustrate how we are meeting our goal:
     
•    the London Stock Exchange is by far the largest equity exchange by value 
     traded in Europe - £2.8 trillion in 2004 - more than twice that of 
     Euronext, our nearest European rival, and third in the world;

•    we are one of the most cost efficient of all the world's major exchanges;

•    last year we attracted 80% of all western European Initial Public 
     Offerings, amounting to 366 new companies; and

•    we handled 45% - £1.2 trillion - of the total global trading in foreign
     equities, which itself grew in value by over half in 2004.

In the past year we have built on the strength of our business model, and
delivered growth in all key areas of the business.  We have achieved this
through strong relationships with our customers, improvements to the efficiency
of our market, such as SETSmm, and heavy investment to keep us at the leading
edge of exchange technology.  At the same time we have encouraged additional
trading through price discounts for higher trading volumes, further reinforcing
our competitiveness in the global market place.

Our financial results for the past year bear out the progress we have made in
strengthening our business. Turnover was up 4 per cent to £260 million despite
an £8m reduction in issuer tariffs. Adjusted basic earnings per share increased
11 per cent, reflecting in part the share consolidation associated with the
special dividend of £163 million paid last August.

The quality of our earnings and the ability of our business to generate cash
underpin our dividend policy and the Board is proposing a final dividend of 5
pence per share. This takes the total dividend for the year to 7 pence - a
payment of £18 million, up 26 per cent on the previous year.

We are dedicated to building on this success and we are positioning our markets
to deliver what our customers, our investors and our companies, great and small,
need as global capital markets go through a period of rapid change.

Let me explain what we are doing in detail:

First, meeting our customers' needs - we play a vital role in reducing
companies' cost of capital, in the UK and across Europe.  In order to compete,
companies of all sizes need cost-effective access to the investment capital that
is abundant in London.  We work closely with the banks and brokers to grow
trading volumes, to deepen the pool of liquidity available to companies and to
lower the cost of accessing the equity capital markets. The results speak for
themselves - over the last three years we have admitted nearly 1000 new
companies to our markets, delivered an increase in trading volumes of 36 per
cent and a reduction in FTSE 100 headline spreads between the bid and offer
price of 56 per cent.

We have attracted new types of business onto our trading platforms. Our services
and prices reflect the impact our new technology is having on the way that
investors and market participants are using the equity markets, especially in
the highly sophisticated areas of trading, such as statistical arbitrage or "
black box" trading.

These changes all contributed to record order book volumes last year. Five years
ago the average daily volume was 25,000 trades per day. Last year we averaged
over 170,000 bargains per day, achieving growth in overall bargains of 14 per
cent - and that against a backdrop of negative cash equity growth on other
exchanges in Europe.

Other changes to our primary markets include new AIM indices, which will bring
even more investor attention to our hugely successful growth company market,
improving its attractiveness to companies and investors alike. This past year
was our busiest year ever for new issues. The 366 IPOs launched on our markets
represent a level of new business which outstripped every major exchange in the
world.

Secondly, the cost efficiency of our trading platform is founded on our
commitment to technology leadership.  Our current programme of investment in new
systems, the Technology Road Map, will extend that lead, enabling us to increase
capacity at very low cost and diversify our product range more quickly and more
simply than ever. This will facilitate easier and much cheaper access to our
market, laying the foundation for further growth and development in the market
place.

Thirdly, we have taken advantage of developments in the global economy as
economic growth in China, India and Russia has leapt ahead of the ability of
their capital markets to support it.  This has given us an opportunity to
benefit from their growth by helping them to access London's international
capital to fund their future expansion. This is why we opened our Asia office in
Hong Kong last year.  We have extended our lead in international listings, with
87 international companies joining the Main Market and AIM over the past year,
including Air China and Sistema, the largest ever Russian IPO.

So what does all this mean for the London Stock Exchange?

It confirms that we have a sound business model and that we are delivering on
our commitments to shareholders and customers. It means that we are
strengthening our brand, thus increasing our influence and our ability to shape
the economic environment in Europe in the years to come. It means that we are
well-positioned to continue our growth and consolidate our position as the
equity market of choice for companies and traders looking to Europe as the place
to do business in the future.

For our shareholders, it means that we have delivered steady earnings growth
through difficult times. Our adjusted EPS over the last five years has risen
from 15.2p per share to 23.5p per share while our dividend has grown at an
annual compounded rate of 22 per cent over the same period.

This year, our business is continuing to deliver, as you can see from our Q1
trading statement - a copy of which is available at the back of the room.
                                         
Turnover for the three months ended 30 June 2005 increased 13 per cent to £67.7
million.  This strong performance was driven by a 40 per cent increase in Issuer
Services' turnover, reflecting a doubling in the number of new and further
issues on our Main Market and AIM from 92 in the corresponding period last year
to 184 this year - June alone saw 82 new issues, the highest monthly figure in
recent history.  Broker Services' turnover increased 11 per cent with daily
average trading on SETS, the electronic order book, up 27 per cent with a 13
percent growth in the value of shares traded.  Information Services' turnover
rose six per cent reflecting growth in terminal numbers over the corresponding
period last year.

This strong start to the new financial year demonstrates why our confidence is
high.

It also explains why the other two leading European exchanges have been so keen
to acquire the London Stock Exchange.  Your Board has retained an open mind
about the advantages of a possible combination.  We recognise that if the right
terms are achievable, a combination could be in the best interests of our
shareholders. But this means there must be something in a combination which
meets the expectations of investors, our customers and the many other
stakeholders whose livelihoods depend, at least in part, on the health and
future prosperity of the London Stock Exchange.

We have made every effort to assist the Competition Commission to understand the
nature of our business and to reach a conclusion that will reconcile all of
these varied interests. In doing so we have of course been mindful of our duty
to you, our shareholders, and of the significant role the Exchange plays in the
UK economy.

The Board recognises that the London Stock Exchange is at the heart of the most
international capital market in the world.  We are confident about our future
and our ability to drive our strategy forward.

Further information is available from:

London Stock Exchange     John Wallace - Media                    020 7797 1222
                          Paul Froud - Investor Relations         020 7797 3322
                          Lyndal Kennedy - Investor Relations     020 7797 3322
Finsbury                  James Murgatroyd                        020 7251 3801
                          Melanie Gerlis                          020 7251 3801



                      This information is provided by RNS
            The company news service from the London Stock Exchange