After a wait of more than two years, the London Stock Exchange (LSE) is finally ready to offer clients the choice of clearing trades executed on its London equity market either through SIS x-Clear, the central counterparty (CCP) owned by the SIX Group, or LCH.Clearnet. LCH.Clearnet was previously the sole CCP for the LSE’s London equity trades.
The exchange wants to offer a choice of clearers to promote competition for post-trade services and drive down the cost of clearing. “[The LSE] believes that the provision of two competing CCPs in the London market should continue to ensure effective price competition at the clearing layer,” the LSE said in a statement.
The routing of trade flows between the two rival CCPs and settlement providers will be handled by X-TRM, a post-trade router provided by Monte Titoli, Italy’s central securities depository. The LSE acquired Monte Titoli when it bought Italian exchange group Borsa Italiana last year.
The LSE first signed the letter of intent with SIS x-Clear to allow it to clear the exchange’s trades back in May 2006. The exchange had originally intended to start offering the ability to clear through x-clear during the first half of 2007, but the project has hit a number of delays.
In February this year, for example, LCH reportedly blocked x-clear’s access to the LSE’s equity business by imposing a charge. This impasse was resolved in March, but the offering was further delayed by an LSE group-wide review of post-trade services, according to news reports.
The LSE said in its statement that offering a choice of clearers is part of its post-trade review, which is continuing.