LCH. Clearnet Group Ltd.

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LCH.Clearnet Group
LCHC.gif
Founded 2003
Headquarters London
Key People Chris Tupker, chairman; Roger Liddell, group chief executive)
Products International clearing service
Website www.lchclearnet.com

LCH.Clearnet (LCH) is Europe’s largest clearing house.[1] It is a cooperatively-owned clearinghouse 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.

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 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 by 2009, the group will be owned 73.3 percent by users, 10.9 percent by exchanges and 15.8 percent by Euroclear.[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 of 2009 in New York to support a push into the U.S. over-the-counter and exchange-traded clearing business.

In October of 2008, LCH.Clearnet agreed to a merger with DTCC, but the merger was derailed by a counter-bid from a consortium of banks led by ICAP. DTCC called the merger off on April 29, 2009, saying it would "pursue other strategic alternatives" because LCH had terminated its exclusivity agreement with DTCC and had not agreed on a basis for consummating the proposed merger.[4] [5] [6]

Products and Initiatives

  • On May 6, 2009, LCH.Clearnet signed an MOU to provide central counterparty clearing services to Chi-X Europe.[7]
  • On May 6, 2009 LCH.Clearnet was selected to clear for NYSE Arca Europe, subject to regulatory approval.
  • On May 6, 2009 LCH.Clearnet announced it was set to launch clearing of over-the-counter (OTC) iron ore swap contracts in May 2009.
  • On Feb. 13, 2009, LCH.Clearnet announced plans to launch a service that will clear credit default swaps by December 2009.[8]
  • 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.[9]
  • 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. It was anticipated the exact date for the launch was to be announced shortly.[10]This put to rest speculation of what may occur with the contracts.[11]
  • 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.[12]


Board Members

References

  1. LME joins offer for LCH.Clearnet. The Financial Times.
  2. History. LCH.Clearnet.
  3. Interdealer brokers may join bid for LCH.Clearnet. Financial Times.
  4. Proposed Merger Between LCH.Clearnet and DTCC Not Proceeding. DTCC.
  5. Interdealer brokers may join bid for LCH.Clearnet. Financial Times.
  6. Icap joins banks and brokers planning £800m bid for LCH.Clearnet. LCH Clearnet Group.
  7. LCH.Clearnet signs MOU with Chi-X Europe. LCH.Clearnet.
  8. LCH.Clearnet enters crowded derivatives ring. Reuters.
  9. "LCH Introduces New Repo Clearing Service". LCH Clearnet Group.
  10. Press Release. European Climate Exchange.
  11. "LCH, ICE dispute leaves ECX cold". Futures Mag.
  12. Press Release. Intercontinental Exchange.