LCH.Clearnet Group Ltd.
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| LCH.Clearnet Group | |
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| Founded | 2003 |
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| Headquarters | London |
| Key People | Jacques Aigrain, Chairman Ian Axe, Chief Executive, David Weisbrod, CEO, U.S. |
| Products | International clearing service |
| Corporate Website | www.lchclearnet.com |
| Releases | Company News |
LCH.Clearnet (LCH) is Europe’s largest clearing house.[1] It is a cooperatively owned clearing house for equities, derivatives and other instruments, formed from the 2003 merger of the London Clearing House and the Clearnet unit of Euronext.
LCH.Clearnet acts an independent central counterparty (CCP) group in Europe for international exchanges and platforms, equity, exchange-traded derivatives, energy, interbank interest rate swaps markets and the majority of the euro-denominated and sterling bond and repo markets.
Contents |
History and Ownership
LCH was created in 1888 to clear commodities contracts, and was owned by the United Dominions Trust until the 1980s, when control transferred to six UK banks. The company started clearing for the London-based futures exchanges - the London Metal Exchange (LME), Liffe and the International Petroleum Exchange (IPE) during the 1980s, and the trio took a minority stake in the business in 1996. LCH started clearing cash equities in 1996, subsequently adding bonds, swaps, repos and energy products.[2]
Clearnet was launched in 1969 as the Banque Centrale de Compensation to clear contracts traded in the Parisian commodity markets. It became a subsidiary of Matif in 1990, and of the unified French securities market, SBF Bourse de Paris, before being subsumed into Euronext in 2000.
LCH.Clearnet currently is owned 73.3 percent by users, 10.9 percent by exchanges and 15.8 percent by Euroclear, upon completion of the Euronext share buyback program in 2009.[3]
Clients include: NYSE Euronext, the London Stock Exchange, Liffe, EDX London, ICAP Electronic Broking, eSpeed, ETCMS, MTS, SwapsWire, SWIFTNet Accord, the London Metal Exchange, ICE, Powernext, Energy and Freight Brokers, and others.
LCH.Clearnet opened an office in March 2009 in New York to support a push into the U.S. over-the-counter and exchange-traded clearing business.
In October 2008, LCH.Clearnet agreed to a merger with the Depository Trust & Clearing Corporation (DTCC), but the merger was derailed by a counter-bid from a consortium of banks led by ICAP. The DTCC called the merger off on April 29, 2009, saying it would "pursue other strategic alternatives" because LCH had terminated its exclusivity agreement and had not agreed on a basis for consummating the proposed merger.[4] [5]
On July 21, 2010, LCH.Clearnet announced that chief executive Roger Liddell intended to retire in July 2011 after five years with the company.[6] In a statement, chairman Jacques Aigrain said that Liddell had "led the firm at a critically important time; LCH.Clearnet’s resolution of Lehman’s $10 trillion default and the successful performance of cleared markets, even at times of extreme market turbulence, have resulted in unprecedented regulatory focus and a growth in responsibility for clearing houses."
It was announced in late August 2010 that he would step down as a director of the LSE's main clearer at the time - LCH.Clearnet - just weeks after launching a review.[7]
On March 9, 2012, the London Stock Exchange announced that it would take a majority stake in LCH.Clearnet in a deal worth as much as €463 million.[8] On March 8, 2013, the LSE agreed to a revised €328 million cash offer. LSE said it wanted to acquire up to a further 55.5 percent in LCH.[9]
In April 2012, it was announced that LCH.Clearnet had agreed to buy International Derivatives Clearing Group, the interest-rate derivatives clearinghouse majority owned by the Nasdaq OMX Group.[10] [11] The acquisition was completed on August 15, 2012, with LCH paying EUR 19.00 per share of IDCG. Also as part of the deal, Nasdaq OMX received a 3.7 percent stake in LCH.Clearnet.[12]
After the IDCG acquisition, the U.S. derivatives clearing organization (DCO) was renamed LCH.Clearnet LLC. On January 23, 2013, the Commodity Futures Trading Commission approved LCH's revised rulebook and amended registration as a DCO, wihich permits it to clear futures contracts, options on futures contracts, commodity options, and swaps where interest rates and/or currencies in the U.S.[13]
Products and Initiatives
- On July 7, 2008 ICE Clear Europe announced that it had reached consensus with LCH.Clearnet on the technical issues to facilitate the movement of all ICE Futures Europe and ICE over-the-counter (OTC) trading positions from LCH to ICE Clear Europe. ICE expected the transition of clearing to ICE Clear Europe to occur during the month of August 2008.[14]
- On Feb. 21, 2008, ECX and ICE Futures Europe announced the imminent launch of futures contracts on Certified Emission Reductions (CERs), noting ECX had reached an agreement with LCH.Clearnet regarding the launch of the contracts. The exact date for the launch was yet to be announced. This put to rest speculation of what may occur with the contracts.[15]
- In April 2008, LCH.Clearnet launched a new repo clearing service called RepoClear €GC. The service gives repo traders a mechanism to address their euro funding needs more effectively by making it faster and easier to move the collateral that underlies their repo trades.[16]
- On Feb. 13, 2009, LCH.Clearnet announced plans to launch a service that will clear credit default swaps by December 2009.[17]
- On May 6, 2009 LCH.Clearnet announced it was set to launch clearing of OTC iron ore swap contracts in May 2009.
- On May 6, 2009 LCH.Clearnet was selected to clear for NYSE Arca Europe, subject to regulatory approval.
- On May 6, 2009, LCH.Clearnet signed a memorandum of understanding (MOU) to provide central counterparty clearing services to Chi-X Europe.[18]
- On March 17, 2010, LCH.Clearnet said it would launch the first clearing of European equity contracts for difference (CFDs), in conjunction with Chi-X Europe, the share trading facility.[19]
- On March 29, 2010, the French arm of LCH.Clearnet launched clearing of credit default swaps.[20]
- In June 2010, LCH.Clearnet became the first derivatives clearinghouse in the world to use overnight index swap (OIS) rate curves to discount interest rate swaps. [21]
- On November 22, 2010, news broke that LCH.Clearnet had rejected a GBP400 million bid from ICE. However, reports noted that the claims were unsubstantiated and LCH.Clearnet denied any bids were made.
- On March 8, 2011, LCH.Clearnet launched SwapClear FCM Service, a platform for the clearing of OTC swaps. The platform was created in anticipation of new Dodd-Frank-related regulations, which stipulate that swaps "eligible for clearing" be cleared via a swap execution facility. On July 27, 2011, asset management giant BlackRock announced that it had cleared its first two interest rate swap contracts on SwapClear.[22]
- It was announced on March 14 of 2011 that NYPC's products may include interest-rate swaps backed by the U.S. operations of LCH.Clearnet.[23]
Board of Directors
- Jaques Aigrain, Chairman, LCH.Clearnet Group Ltd.
- Ian Axe, Chief Executive, LCH.Clearnet Group Ltd.
- Bruno Prigent, Société Générale Group
- Christopher Willcox, J.P. Morgan
- Denise Wyllie, Goldman Sachs
- Edward McAleer, Morgan Stanley & Co International plc
- Edward Pla, UBS
- Garry Jones, NYSE Euronext
- Gerard Hartsink, ABN AMRO N.V.
- Hervé Saint-Sauveur
- Ian Abrams, Mizuho International plc
- John Townend
- Laurent Curtat, Credit Suisse
- Lawrence Shaw, Deutsche Bank
- Martin Abbott, London Metal Exchange
- Martin Ryan, Royal Bank of Scotland
- Mike Bagguley, Barclays Capital
- Naveed Sultan, Citigroup
- Nazir Badat, HSBC Bank plc
- Olivier Motte, Credit Agricole
- Vivien Levy-Garboua, BNP Paribas
References
- ↑ LME joins offer for LCH.Clearnet. The Financial Times.
- ↑ History. LCH.Clearnet.
- ↑ Interdealer brokers may join bid for LCH.Clearnet. Financial Times.
- ↑ Proposed Merger Between LCH.Clearnet and DTCC Not Proceeding. DTCC.
- ↑ Interdealer brokers may join bid for LCH.Clearnet. Financial Times.
- ↑ Roger Liddell to retire in 2011. LCH.Clearnet.
- ↑ Rolet Quits Board of LCH.Clearnet. Financial News.
- ↑ LSE agrees terms of stake in LCH.Clearnet. Financial Times.
- ↑ LSE and LCH agree revised $426 million offer. Reuters.
- ↑ LCH.Clearnet in Talks to Buy International Derivatives Clearing Group from Nasdaq. Securities Technology Monitor.
- ↑ LCH.Clearnet in Talks to Buy Nasdaq's Rate Clearinghouse. Bloomberg.
- ↑ LCH Buys IDCG, U.S. Swaps Clearinghouse, From Nasdaq. Bloomberg.
- ↑ CFTC Approves Rulebook and Issues Amended Registration Order for LCH.Clearnet LLC. CFTC.
- ↑ ICE Clear Europe Provides Update on Clearing Transition Plan. Intercontinental Exchange.
- ↑ LCH, ICE dispute leaves ECX cold. Futures Magazine.
- ↑ LCH.Clearnet Launch Innovative New RepoClear €GC Service. LCH Clearnet Group.
- ↑ LCH.Clearnet enters crowded derivatives ring. Reuters.
- ↑ LCH.Clearnet signs MOU with Chi-X Europe. LCH.Clearnet.
- ↑ LCH.Clearnet to start handling CFD contracts. The Financial Times.
- ↑ Blow to London as LCH.Clearnet launches clearing house in Paris. The Financial Times.
- ↑ LCH.Clearnet Launches U.S. SwapClear FCM Service. Futures Magazine.
- ↑ LCH.Clearnet Clears OTC Trades For BlackRock. Futures Magazine.
- ↑ LCH.Clearnet may join NYSE effort to take on CME Group on rates. Futures.
