In a statement LCH.Clearnet says it will now cooperate with SIS x-clear on a "peer-to-peer basis" in the clearing of trades executed on the LSE "in accordance with the access and interoperability provisions of the European Code of Conduct".

The Swiss central counterparty has been forced to delay the launch of its UK equity clearing service after LCH.Clearnet refused to allow it free access to the LSE equity business as required under the voluntary code of conduct.

The SIS x-clear system was due to go live in February but was delayed after LCH.Clearnet - which is currently the only clearing provider for LSE-listed stocks - reportedly imposed a charge to access business on the exchange.

At the time a spokesman for SIS x-clear told Finextra that the clearing house is "technically and operationally ready" to launch the UK service and to switch over any new users, but SIS x-clear was "suffering because of a lack of cooperation" from LCH.Clearnet.

There is still no fixed start date for the SIS x-clear system, but LCH.Clearnet says the service will be launched in the next few weeks.

Roger Liddell, group chief executive, LCH.Clearnet, says the clearing house decided to cooperate with SIS x-clear after being "strongly encouraged" by customers.

The code of conduct on clearing interoperability was agreed by securities markets participants under the threat of legislation from the EC, which was concerned about the high costs of share trading across European border.

It was reported that LCH.Clearnet, which has supported the code of conduct, was blocking SIS x-clear in protest at barriers it is facing itself in Europe, particularly Germany and Italy.

Last year LCH.Clearnet issued formal requests to Deutsche Börse and Borsa Italiana for full interoperability with Eurex Clearing and Cassa di Compensazione e Garanzia respectively. The links would enable market participants to consolidate clearing of cash equities traded on four separate European markets - LSE, virt-x, Deutsche Börse and Borsa Italiana - at LCH.Clearnet.

But according to reports the London clearing house has been prevented from entering new markets by regulations in Germany and Italy which are thought to require the London clearing house to set up a local bank in order gain access to local markets.

Liddell says despite the work LCH.Clearnet has been doing since last August in Frankfurt and Milan "we have no evidence that the code of conduct is being successfully implemented elsewhere".

"We will not therefore be prepared to contemplate any further extension of peer-to-peer clearing relationships unless appropriate access is unambiguously established across all the other markets where LCH.Clearnet has sought it," he adds.

News of the SIS x-clear deal comes amid reports that LCH.Clearnet has agreed to scale back a clearing contract it has with London-based derivatives exchange Liffe.

According to recent press reports, Liffe wants to take over from LCH.Clearnet as central counterparty but continue to use the clearing house for other post-trade services such as trade guarantees and overseeing the fund covering members who default on trades.

The move by Liffe is thought to be an attempt by the Nyse Euronext unit to to fight off competition from Project Rainbow, a European exchange being set up by investment banks.

LCH.Clearnet is also thought to be considering whether to allow Project Rainbow to clear trades through its system.