Euronext has Plan B for clear­ing house

The Star Late Edition - - COMPANIES - Reuters

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.

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