Following its deal to provide clearing services for the LSE, Swiss central counterparty SIS x-clear says it is determined to undercut fees charged by LCH.Clearnet, currently the sole clearing provider for the London exchange's equity business.
The LSE said last week that it had inked a deal with SIS x-clear that will give its customers a choice of clearing venues through the Swiss central counterparty or through LCH.Clearnet.
According to a Financial Times report, a price war is now set to erupt between the rival clearing houses.
Peter Sami, chief executive of SIS Group, told FT reporters that SIS x-clear will be cheaper than LCH.Clearnet, although he declined to indicate by how much the Swiss firm would undercut LCH.Clearnet fees.
SIS x-clear is expected to start clearing LSE trades in the first quarter of next year. Sami says the company's aim is a 10% market share at the start and increasing thereafter.
SIS currently handles about 65% of trades on the London-based Virt-x electronic platform, with LCH handling the remainder. A 10% share of LSE trading would be roughly equivalent to SIS's current volume on Virt-x, says the FT report.
Last month a European Commission report criticised the lack of competition in EU securities clearing and settlement. But the report, which looked at competition in cross-border clearing services, found that the LSE has some of the lowest clearing costs of any exchange through its contract with LCH, although Borsa Italiana was found to have the lowest trading costs.