The London Stock Exchange is to open a central securities depository (CSD) in Luxembourg to provide a full range of custody and settlement services across the eurozone.
The move by the Exchange builds on the existing infrastructure of the LSE's Italian CSD, Monte Titoli, and pits it into direct competition with Clearstream and Euroclear.
The LSE says it has already reached an agreement with JPMorgan Chase to provide the big US bank with settlement, custody and asset servicing services for its international collateral management business.
Under European Market Infrastructure Regulation (Emir), central counterparties (CCPs) are required to hold collateral assets posted as margin or as default fund contributions at a securities settlement system, such as a CSD, where possible.
Raffaele Jerusalmi, CEO of Borsa Italiana and director of capital markets, LSE says: "The Group is well placed to provide a full range of post trade services to meet the evolving needs of our customers arising from on-going financial regulatory change and the continued focus on operational efficiency."
He says Luxembourg was selected as the location for this new service as a result of customer demand.
Subject to regulatory approvals, the CSD is expected to launch in the first half of 2014.