Clear solution

6 May 2009 By Mike Prest

An inefficient market for clearing is inflating the cost of European securities trading. A single mutually owned clearer is one solution, but looks hard to achieve. Better to drive competition by forcing exchanges to use the cheapest clearer even if they don’t own it.

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A consortium of 11 banks and Icap, the interdealer broker, has indicated that it may bid for LCH.Clearnet, the Londonbased clearer. DTCC, the US clearing organisation, announced on April 30 that it had ended talks about taking over the company.

LCH.Clearnet said in April it would cut its fees by onethird and recently signed agreements to clear for Turquoise and NYSE Arca Europe, along with a deal to offer central counterparty services to ChiX Europe.

EuroCCP, the European arm of DTCC, and SIX xclear, the Swissbased clearer, announced on May 7 that they had signed an memorandum of understanding to operate with each other. Turquoise said it would offer users interoperability between EuroCCP and SIX xclear.

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