DTCC and LCH Clearnet merger

The speculation that DTCC are in talks with LCH Clearnet, with a merger as a possible result must be music to the ears of everyone in the securities market. The consolidation of Clearing on this scale will be creating a mammoth opportunity for the markets to finally start the walk towards industry wide STP in the international cross border business.

LCH Clearnet has been having some trouble lately along with others in the clearing business in maintaining their business credibility at a time when so many new trading venues are springing up. The whisper in the market is that the LSE is following LIFFE and considering changing their clearing relationship which threatens LCH Clearnet. This is strangely happening at the same time as they win new business from the Börse Berlin Equiduct trading platform. So we have a very odd situation developing where market consolidation in the clearing business has begun and agreements between Clearing entities are under starters orders but now we have the potential for fragmentation, putting the securities industry back to square one and will waste the many years it took to achieve the current position.

The possibility that the DTCC will merge or buy LCH Clearnet will be a very welcome stake in the ground for everyone that believes that consolidation of clearing and settlement is not simply a nice to have but a total necessity.