LONDON, April 3 (IFR) - Pan-European stock exchange
Euronext, has signed a binding agreement of terms with ICE Clear
Netherlands for the provision of derivatives and commodities
The deal, which is expected to be formalised in the coming
weeks, comes days after Euronext's attempts to gain control of
LCH.Clearnet SA were thwarted. The agreement will see the
exchange sever ties with the Paris-based clearing firm for the
purpose of derivatives clearing when an agreement with LCH comes
to an end in December 2018.
Euronext was due to take control of LCH's French clearing
arm for €510m, contingent on the successful US$14bn acquisition
of LCH's parent, London Stock Exchange Group, by Deutsche
A merger between the two exchange giants was blocked by EU
antitrust commissioners last week on the grounds that it would
created a monopoly in fixed income markets.
Under the new agreement, customers would begin to migrate to
the ICE CCP during the second half of 2018, ahead of the
expiration of an existing agreement with LCH.Clearnet SA.
The agreement with ICE Clear Netherlands, which covers
clearing for financial and commodity derivatives over a 10-year
period, will see Euronext make an upfront investment of €10m in
the clearing firm. Euronext will also appoint one representative
to the CCP's risk committee as well as chairing a product
committee dedicated to the exchange's clearing service.
According to Euronext, the deal will deliver a 15% reduction
in client costs through lower headline clearing fees, treasury
management fees and further capital efficiencies.
Clearing operations will be run from Amsterdam, while a new
asset financing, inventory management and physical delivery
platform for commodities will be built by Euronext and operated
For cash equity markets, Euronext has launched its own
Preferred Clearing service offering trading participants a
choice of central counterparties from Clearnet and EuroCCP, in
which it holds a 20% equity stake.
Stephane Boujnah, Euronext CEO and chairman of the managing
board, said the exchange remained a willing buyer of LCH's
Paris-based clearing business at the agreed terms, irrespective
of the merger's demise.
"Euronext has reaffirmed to both LSE and LCH Group its
willingness to proceed with the acquisition of Clearnet for
€510m, and Euronext continues to remain a willing buyer of
Clearnet," said Boujnah in a statement. "In the absence of
obtaining an agreement to complete this acquisition, Euronext is
fully committed to securing the best long-term solution for its
post-trade activities, in the interests of clients and
(Reporting by Helen Bartholomew)