LCH.Clearnet says implementation of the links will enable market participants to consolidate clearing of cash equities traded on four separate European markets - London Stock Exchange, virt-x, Deutsche Börse and Borsa Italiana - at LCH.Clearnet, and deliver the choice of central counterparty (CCP) demanded by users in line with industry-agreed guidelines.

The clearing house says the extension of its services to Germany and Italy will help lower unit costs, thus giving scope for further fee reductions across all markets.

Roger Liddell, group chief executive at LCH.Clearnet, says: "We look forward to working with both Deutsche Börse and Borsa Italiana on these initiatives and we are confident that access will be swiftly granted. These initiatives should demonstrate that peer-to-peer clearing links, where neither CCP pays the other ongoing fees, can be established across Europe, and will enable us to complete the development of a similar arrangement with x-clear for the London Stock Exchange."

The creation of the guidelines follows steps taken at the end of 2006 to lower corss-border trading costs and improve price transparency and was formally endorsed by the European Commission last month. The next phase of the Code, to be implemented by the end of 2007, involves unbundling services and separating the accounts of each service segment. This is largely aimed at the practices of siloed operators such as Deutsche Börse and Borsa Italiana, which operate vertically integrated models for trade execution, clearing and settlement.