LCH.Clearnet was formed three years ago by the merger of Clearnet, which was then 80%-owned by Euronext, and the mutually owned London Clearing House.

Euronext has previously stated that it would reduce its normal equity stake to below 14.99% in order to meet the requirements of a Competition Commission inquiry. But according to press reports, the exchange could reduce its stake down to as low as five per cent or could pull out of the clearing business entirely.

Talks with the LCH.Clearnet board were kick-started by Euronext chief executive Jean-François Théodore, who doesn't believe that exchanges should own clearing houses and is keen to exit the clearing business.

Théodore, along with other senior managers at the exchange, are thought to have had a series of meetings with LCH's management team.

Euronext's share in the business is made up of a normal equity stake of 24.9% with the second part made up of convertible preference shares - which contain voting rights - and make up the equivalent of a further 16.6% stake. Under the plan, Euronext would sell its shares to LCH.Clearnet. The shares would then be cancelled which would give LCH's remaining shareholders a greater proportional take in the company.

It is not known what price Euronext would accept for the stake, but according to a report by UK broadsheet The Daily Telegraph, the pan-European exchange is in talks to sell back all its shares to LCH for about EUR500 million.

The exchange operator carries the LCH stake in its books at EUR432.4 million, says the report, comprising EUR233.2 million for the equity stake and EUR199.2 million for the convertible part.

Euronext's move to sell its stake comes after a bungled IT integration project that forced the clearer to write off EUR47.8 million in capitalised technology costs and led to the departure of long-standing CEO David Hardy.