Standard & Poor's has cut the credit rating of Nyse Euronext and warned that LCH.Clearnet may face a similar fate following the exchange's decision to sever ties with the clearing house.
Earlier this week Nyse Euronext outlined plans to set up its own clearing houses in London and Paris in late 2012, ending its relationship with LCH.Clearnet.
S&P reacted to the news by cutting the long term rating on Nyse Euronext and its Euronext subsidiary from 'AA' to 'AA-' and also indicated a further cut is possible by putting both on "creditwatch with negative implications".
"The building of two clearinghouses in Europe changes the company's risk profile, introducing a degree of credit and financial risk that is currently not reflected in the ratings," says the agency in a statement.
The downgrade is also in part a response to S&P's belief that the exchange has failed to do enough to improve its financial profile but does not reflect the chaos that saw the Dow plunge earlier this month.
S&P has also put its 'A+/A-1' rating for LCH.Clearnet on creditwatch with negative implications in response to the company losing such a major client.
Says S&P: "In our opinion, the loss of one of its largest clearing contracts will severely impact LCH.Clearnet's business in France and to some extent in its UK business too. This pressure will likely add to heightened competitive forces from other European clearinghouses, and falling clearing tariffs and trading volumes."
Meanwhile, Autorite des marches financiers, the Bank of France and the Prudential Control Authority have issued a joint statement warning they will closely monitor Nyse Euronext's clearing plans, calling for a smooth transition from LCH.Clearnet to ensure stability.