The London Stock Exchange and LCH.Clearnet, the European clearing house, are in talks about changing the terms of an agreed €463 million deal, even as the proposal passed a key regulatory hurdle.
The two groups said on Friday they were in discussions about “potential changes to the commercial terms of the transaction” that would see the LSE take a stake of up to 60 per cent in LCH.
The UK’s Office of Fair Trading gave its endorsement to the deal on Friday, which was one of the final regulatory obstacles to the completion of the takeover.
The LSE had agreed to buy the controlling stake in LCH.Clearnet in a deal that implies a valuation of €813 million for LCH. French, Spanish and Portuguese authorities have already backed the acquisition. The Dutch are expected to give their approval soon.
Regulators want to move more of the off-exchange derivatives markets on to transparent trading venues like exchanges, with deals processed by clearing houses.
The deal will give the LSE its own clearing house as global regulators push for greater use of such clearing houses to safeguard the financial system.
The bourse will be able to earn profits from fees charged for offsetting the risk in open-ended derivatives contracts, which often have multiyear durations. It will also allow the LSE to compete with rivals such as NYSE Euronext and Deutsche Börse, who already own their own clearing houses. LCH.Clearnet clears nearly half of the world’s $400 trillion global interest rate swap market and is the second-largest clearer of bonds and repos in the world.
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