Börse Berlin has selected LCH.Clearnet to provide clearing and settlement services for its MiFID-compliant pan-European Equiduct Trading platform, which is expected to launch in the middle of the year.
Börse Berlin has signed a preliminary agreement with LCH.Clearnet for the provision of central counterparty clearing (CCP) services for transactions executed on Equiduct Trading.
The Equiduct Trading system will enable users to clear and settle trades in domestic post-trade locations and will ensure that the post-trade cost of a transaction is at least as low as on the local domestic exchange.
LCH.Clearnet will be the first CCP to be connected to the platform. The clearing house says the deal will allow its clearing members to benefit from synergies between the Equiduct Trading market and Nyse Euronext markets. Offsetting at risk management and settlement levels will be set up and will lead to substantial economies, claims the depository.
"LCH.Clearnet's experience and commitment to cash clearing business together with its proven technology will bring our participants the possibility to leverage existing clearing member relationships, legal frameworks and connections," says Willy Van Stappen, COO, Börse Berlin Equiduct Trading.
Christophe Hémon, CEO, LCH.Clearnet, says the Equiduct Trading deal "underlines our desire and capacity to clear new markets and to respond to new initiatives introduced by the Markets in Financial Instruments Directive".
The launch of the service, subject to regulatory approval, is expected to take place by the end of the first semester 2008.
News of the Equiduct Trading deal comes just days after reports that London-based derivatives exchange Liffe is re-negotiating its existing contract with LCH.Clearnet.
Liffe is thought to want to take over from LCH.Clearnet as central counterparty but continue to use the clearing house for other post-trade services such as trade guarantees and overseeing the fund covering members who default on trades.
Meanwhile, US market operator IntercontinentalExchange has said it plans to terminate its existing clearing agreements with LCH.Clearnet and establish its own operation in London.
In a separate move, earlier this year LCH.Clearnet refused to allow Swiss rival SIS x-clear free access to the London Stock Exchange's equity business as required under the EC's voluntary code of conduct.
The London clearing house has supported the code of conduct but is reported to be blocking SIS x-clear in protest at barriers it is facing itself in Europe, particularly Germany and Italy.
Last year LCH.Clearnet issued formal requests to Deutsche Börse and Borsa Italiana for full interoperability with Eurex Clearing and Cassa di Compensazione e Garanzia respectively. But LCH.Clearnet seems to have hit a stumbling block as regulations in Germany and Italy are thought to require the London clearing house to set up a local bank in order gain access to local markets.