The timing is unfortunate, coming just after the European Securities Foundation published a blueprint calling for the establishment of a central counterparty (CCP) for pan-European stock trading. The industry-backed ESF coalition believes that Europe's fragmented clearing and settlement system is a costly stumbling block to the development of truly integrated financial markets.

LCH gave a cautious welcome to the ESF blueprint and reinforced its support for the creation of a pan-European CCP. The independent clearing house has been engaged in detailed discussions with both Paris-based Clearnet and Eurex Clearing for much of the year.

Plans for a merger between LCH and Clearnet have been put on the back burner while Clearnet owner Paris Bourse prioritises its merger with the Amsterdam and Brussels exchanges to create Euronext. Talks between Eurex and LCH were initiated at the time of the proposed merger between Deutsche Borse and the London Stock Exchange, but have now been put on ice following the Bourse's recent decision to demutualise.

David Hardy, LCH’s chief executive, says: "Whilst the creation of Euronext and the commencement of the Deutsche Bourse IPO process may be regarded as understandable strategic developments when viewed from exchange perspectives, the delays that have been consequently imposed on the process of CCP integration are frustrating."

LCH and ten other clearing organisations recently announced plans to co-sponsor a conference on the development of a global central counterparty for trading across time-zones. The event, to take place in London at the end of January, has been prompted by the publication of a recent Depository Trust and Clearing Corporation white paper, which argues that a global clearing solution is needed to help lower costs, reduce risk and facilitate the growth of trading.