LCH.Clearnet and X-Clear get FSA approval for interoperability

LCH.Clearnet and X-Clear get FSA approval for interoperability

European clearing house interoperability has moved a step nearer after the UK's FSA approved new arrangements between LCH.Clearnet and Switzerland's X-Clear.

Plans to let clearing house users execute trades with a counterparty tapping a different one have long been on the cards as a way to reduce trading costs for market participants.

However, they have been stymied over the last couple of years by regulators' concerns about the associated systemic risks. LCH.Clearnet had to abandon its bid to offer clearing services to Chi-X, Bats, Turquoise and Nyse Arca - despite agreeing interoperabilty deals with their respective central counterparties - in 2009.

Now, according to the Financial Times, the FSA has given the green light to LCH.Clearnet and X-Clear after new risk management structures were agreed. With other clearers able to join their network if they get regulatory approval, the FT speculates that interoperability could be a reality by the end of the second quarter.

FSA approves new LCH and X-Clear system - FT (subscription)

Comments: (1)

Gary Wright
Gary Wright 12 May, 2011, 16:59Be the first to give this comment the thumbs up 0 likes

This will surely be discussed at the Post Trade Forum Clearing House consolidation debate hosted by the London Stock Exchange on the 23rd June. I still have my doubts about the interoperability solution but at least this looks a positive move.