London, German bourses offer clearing house sale

BERLIN • Stock exchange operators Deutsche Boerse and London Stock Exchange (LSE) yesterday said they would offer to sell French clearing house LCH Clearnet as they push for regulatory approval of their planned merger.

The two firms, whose operations include the London and Frankfurt stock markets, "decided to formally submit the divestment of LCH Clearnet by LCH Clearnet Group as a remedy to the European Commission in order to address anti-trust concerns", they said in a statement.

Plans to offload the French arm of LSE's clearing house business have been brewing since early last month, when the British firm agreed in principle to sell it to its European rival Euronext.

If the merger with Deutsche Boerse - in the works since last February - goes ahead, Euronext will buy LCH Clearnet for some €510 million (S$772 million).

Monday evening was the deadline for Deutsche Boerse and LSE to offer remedy proposals to alleviate Brussels' competition fears over their tie-up.

Clearing houses are a key part of market infrastructure, acting as an intermediary between buyers and sellers of financial instruments, ensuring settlement of trades.

It remains to be seen whether the EU authorities, which opened an in-depth probe in September, will accept the sale as sufficient to assure the deal is waved through.

The proposed deal has drawn sharp rebukes from France, Belgium, Portugal and the Netherlands, fearful for their own stock exchanges, owned by Euronext.

Deep concerns over competition helped scupper two earlier bids by the companies to merge, in 2000 and 2005.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on February 08, 2017, with the headline 'London, German bourses offer clearing house sale'. Print Edition | Subscribe