Xavier Rolet today stamped his authority as new chief executive of the London Stock Exchange with an £18 million deal to bring the market's key trading technology back in-house.

The deal to buy MillenniumIT of Sri Lanka for $30 million reverses a long-running trend by the Exchange and his predecessor Dame Clara Furse of cutting costs by outsourcing IT needs. It will come as a blow to Accenture, which handled much of that outsourcing for years, although Cisco and Microsoft have also done big projects for the Exchange.

The deal also sounds the death knell for current LSE trading system TradElect, which got a £40 million upgrade two years ago and will now be replaced by the Sri Lankans' system from the end of next year.

But in a period where the LSE is facing increasing competition from rival trading systems such as Chi-X and Turquoise, Rolet decided it had to have in-house technology that it owned. He said it would not only make the LSE more agile and innovative but also provide it with a faster, bigger share-trading platform.

MillenniumIT was set up by Sri Lankan entrepreneur Tony Weerasinghe in 1996 and counts the London Metal Exchange and Michael Spencer's interdealer broker Icap among its clients. Rolet wants MillenniumIT to continue acting as outsourcing consultants to other financial firms and markets. He said: "It is a proven business, already serving multiple clients in multiple geographies, including some of the best-known in their fields. The potential from this transaction is considerable for both parties."

The LSE expects the deal to save it at least £10 million a year in IT development and operational costs from 2011-12.