Euronext has Plan B for clearing house
PAN-EUROPEAN exchange Euronext may still buy a clearing house for derivatives if its planned purchase of LCH, which it uses, from London Stock Exchange (LSE) falls through.
Euronext has agreed to buy Paris-based LCH for 510 million (R7.14 billion), but the deal can go ahead only if LSE Group succeeds in merging with Deutsche Börse, a tie-up on which regulators will rule by the end of June.
“If the merger… is not completed for whatever reason, we will pursue alternatives to offer the best clearing services to our clients,” Euronext chairperson and chief executive Stephane Boujnah said yesterday.
A clearing house ensures a stock, bond and derivatives trade is completed even if one side of the transaction goes bust. LCH is authorised to clear derivatives, an activity that is set to grow sharply, and Euronext’s contract expires in 2018.
Other derivatives clearing houses in Europe include those operated by CME and ICE.