The London Stock Exchange’s (LSE) LCH Clearnet SA is in discussions to provide clearing of European equities traded on Turquoise, shortly after the breakdown of acquisition talks with Euronext.
In a response to Euronext’s recent agreement with ICE Clear Netherlands, LSE explained LCH SA will be added to Turquoise as an additional choice central counterparty (CCP) for members.
LSE added the deal between turquoise and LCH SA could see significant cost savings and efficiencies passed on to investors in French, Dutch, Belgian, Portuguese and other European securities.
The exchange noted the block trading service, Turquoise Plato, “is uniquely positioned to provide clients with the ability to trade significantly larger trade sizes versus industry dark pool averages in anticipation of MiFID II.”
News of the partnership follows Euronext’s decision to use ICE Clear Netherlands for the provision of clearing services for its derivatives products.
Euronext explained considering the “refusal of LSE Group and LCH Group to engage in discussions about completing the agreed sale of Clearnet,” it must seek other clearing solutions for its clients.
In response, LSE stated: “The sale of LCH SA to Euronext was specifically contingent upon the merger between LSE and Deutsche Boerse completing, and under the terms of the sale it is terminated upon prohibition of the merger by the European Commission.”
The European Commission officially blocked the proposed merger last week, citing a de facto monopoly in fixed income clearing as the reason for its decision.
The LSE offered to sell its LCH SA business to remedy competition concerns and Euronext made a €510 million bid for the French clearing house.
It came as a blow to Euronext’s plans to expand its post-trade services to new asset classes in continental Europe.
“In the absence of obtaining an agreement, Euronext is fully committed to securing the best long-term solution for its post-trade activities, in the interests of clients and shareholders,” Stephane Boujnah, CEO, Euronext, responded at the time.