Nyse Euronext dumps LCH.Clearnet to set up own European clearing houses
12 May 2010 | 9465 views | 1
Nyse Euronext says it plans to start clearing its own securities and derivative trades in Europe from 2012, severing ties with LCH.Clearnet.
Subject to regulatory approval the transatlantic operator will spend $60 million on two new, purpose-built, clearing houses based in London and Paris in late 2012.
The London house will clear listed interest rate, commodities and FX products with the Paris unit handling equities and equities derivatives products. The firm says it also intends to extend clearing services to OTC markets.
The move builds on the launch of Nyse Liffe Clearing last year, which began clearing for the London-listed derivatives business, although some services were outsourced to LCH.Clearnet. That change cost the exchange operator $355 million in a severance payment to LCH.Clearnet but no termination fees are needed this time.
The financial crisis has led regulators to push for greater use of clearing houses, making it an increasingly lucrative business. In following the lead of Deutsche Börse and CME Group, which both clear themselves, Nyse Euronext predicts it will bring in at least $100 million a year in revenues from 2013.
The firm says customers will also benefit from a common clearing system, developed from a base of existing operational technology, across all of Nyse Euronext-listed asset classes, which will result in savings.
Duncan Niederauer, CEO, Nyse Euronext, says: "This is an exciting and enterprise-transforming project that will greatly benefit our customers and further enhance the company's presence in Europe's two most important financial centres, London and Paris. After successfully commissioning our new mission-critical trading infrastructure, UTP, across all of our businesses globally, we are now committed to investing similarly in mission-critical post-trade infrastructure in Europe."
Responding to the news, LCH.Clearnet CEO Roger Liddell says: "This is an important and exciting time for clearing with regulators and policymakers globally looking to clearing to reduce systemic risk. LCH.Clearnet is well placed to benefit from this. It has unique clearing experience and is the only clearing house with 10 years of market leading experience in clearing OTC products. We shall seek to continue to diversify our revenues as we develop new exchange and OTC initiatives."