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London Stock Exchange CFO on stepping up in a crisis

David Warren spent a challenging eight months as LSE Group’s interim CEO and CFO. The American reveals how a broad set of experiences prepared him well for the dual role.

In November 2017, the London Stock Exchange Group’s chief executive Xavier Rolet left the £16bn group after a row with shareholders that left Bank of England governor Mark Carney “mystified.”

It was initially announced two months earlier that Rolet- who had for several years led a powerful transformation of the group- was leaving the LSE, which produced a backlash from 5% owner the Children’s Investment Fund Management (TCI).

As a complex drama played out, TCI called for an emergency general meeting (egm) to reinstate Rolet- assuming he wanted to remain in the role-and to replace chairman Donald Brydon, who steps down this year.

As turmoil seemed to engulf one of the world’s oldest exchanges that started life in 1571, it was announced CFO David Warren would also become interim CEO of the group.

That was no mean feat given that the London-listed LSE is one of the world’s most high profile exchanges- with billions of dollars in trades undertaken across its platforms every day.


Warren says his work across public and private entities equipped him with a breadth of experience that is good preparation for complex challenges. “Part of my career has been going back and forth between those sectors and weaving my experiences together, because I find the exciting opportunities have been on the interfaces between sectors,” he says. “We are increasingly a connected society, with no sharp lines between the not-for-profit world, the government world and the for-profit business world.”

From Wesleyan University to an MBA at Yale School of Management, he started in investment banking at Credit Suisse First Boston before moving into state government, as deputy treasurer of the state of Connecticut. He says government work offers a richness of views and experiences, and the means to forge a “meaningful, workable consensus, something you are constantly working on in any situation,” he adds.

Warren’s profile was elevated dramatically in 2001 when he became CFO of New York-based exchange NASDAQ soon after joining as Chief Administrative Officer and played a key role in its development through demutualisation. “It was a very innovative exchange, with cutting edge technology, that was doing a lot to drive and fund the growth of hi-tech technology companies in the US.

“A lot of tech companies had IPOs, so there was a lot happening, the opportunity at NASDAQ was to take an operation that was operated by the NASD (the National Association of Securities Dealers) and spin that off.”

“I was brought in to build a whole team,” says Warren. “When I showed up the finance team that directly reported to me numbered five, everything else was provided to NASDAQ by the NASD, so I then had to build standalone finance functions, the FP&A function, Treasury, IR, tax, accounting functions, and all the systems that went with that.

“In some respects, it had all of the excitement and challenge and fun of a start-up company because we were building something fresh, but it also had a 30-year history and a bottom line, so it was an interesting combination,” says Warren.

 Boom and bust

At NASDAQ Warren was very much at the epicentre of some of the most dramatic events that unfolded in the early 21st century- the boom and bust of the dotcom era and the financial crisis, all the while playing a key part in making the exchange a global force.

“We started on our journey on the IPO as the dotcom era was starting to decrease. But for us it was a tremendous growth period, NASDAQ made a number of acquisitions in the US, began to be an international group through the acquisition of Nordic exchanges that were part of OMX,” says Warren.

On the financial crisis he says: “It was a tremendous shock. But the immediate impact on NASDAQ was as much about how was it impacting on our relationship with our customers, we did not have a large clearing operation so we were not clearing any positions.

“But as providers of financial market infrastructure, exchanges had to look at the crisis in terms of what impacts there might be in regulation affecting some of our large banks, because as an exchange we provide infrastructure for them.”

When approached about becoming CFO of LSE, Warren was well known in London circles, given a couple of attempts to deliver a merger between NASDAQ and the LSE in the preceding years. “I was quite aware of the strategy the Exchange (LSE) had been following, that Xavier Rolet was putting in place and where he was moving the company,” he says.

“It was what all exchanges were trying to do at the time, thinking more broadly as a financial markets infrastructure company, and building products and businesses with more geographic and product diversity,” he says.

The LSE was already in a period of rapid change, says Warren. In 2009 capital markets activity comprised more than half of the group’s revenues, but a series of deals including acquisition of a majority stake in LCH (London Clearing House), moving into the post-trade business and building an information services business, changed the group’s profile.

“There was a lot of organic investment- in new products and services. We expanded into very high growth areas that are less dependent directly on capital market flows, so that was part of the diversification, that was the opportunity coming here in 2012, to be part of that journey,” he reveals.

LSE delivered strong growth on the back of the diversification programme, but an attempted merger with Deutsche Borse in 2017 failed to materialise. “We came back to our investors and articulated that the core, fundamental standalone business of the London Stock Exchange group is healthy. We kept up momentum throughout, taking advantage of secular trends, such as the shift from active to passive investing.

“We also took advantage of regulatory trends – reforms that were coming out of the 2008 crisis and the G20 reforms, as there was more of a regulatory push to put more OTC derivative contracts into central clearing, as a way of getting better risk management and better capital efficiencies,” he adds.

Stepping up

Warren won’t talk specifically about the departure of Rolet. “It was a matter between Xavier and the board,” he stresses. He says: “My experience through the process was one of working to keep the company moving forward. I was honoured to be asked by the board.”

Warren says his decision to step into the breach was made easier by a business plan already well laid out and well understood. Keen to stress he didn’t want the permanent CEO role, Warren says he committed himself to staying on at the group- wearing both hats until a new CEO was found.

“I knew it was going to be a challenge,” he says. But he insists that the breadth of experience accumulated over his varied career had prepared him for that moment. “What have all these experiences meant to me? It’s effectively been around leadership, about articulating a strategy, a vision and a plan and then finding the people and then leading that forward,” he says.

Having  a strong finance team helped him to straddle both roles, says Warren. In addition, he adds that powerful tools in the finance function enabled him to gain  a good view across the group’s activities, which helped leading from the front. “Finance functions can get a broad perspective of a company, and as a result of that understand it better and see where opportunities are,” he asserts.

The arrival of new chief executive David Schwimmer from investment banking powerhouse Goldman Sachs last August ended Warren’s interim CEO role. On their working relationship, he says: “I think it’s always good that between the CEO and CFO, different views can be expressed,” he says.

Earlier this month LSE took a 4.9% share of clearing house Euroclear to ensure the group is future-proofed against a changing regulatory environment. “We’re always looking at a number of opportunities,” says Warren. “You have to be able to move quickly if something presents itself, you’ve got to have that flexibility because this is how you’re going to grow,” he adds.


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