LCH.Clearnet has announced a much anticipated financial restructuring, which sees the end of Euroclears 15.8% stake in the clearing house.
Pierre Francotte, Euroclear Chief Executive Officer, stated: Euroclear currently intends to redeem its 15.8% stake in LCH.Clearnet. Euroclear remains committed to delivering greater post-trade efficiencies to mutual clients by ensuring seamless interaction between clearing and settlement.
In a statement from LCH.Clearnet, the clearing house will be owned predominantly by users of its services and exchanges which have a clearing relationship with the Company. The increased proportional shareholding of key users will enable LCH.Clearnet to work more closely with its customers, in order to capitalise on opportunities for clearing new markets, and will make it easier to counter competitive pressures by reducing fees.
Commenting on the redemption Chris Tupker, Chairman, LCH.Clearnet said: It is essential we are positioned to respond swiftly to the changing market environment by offering both lower fees and innovative services. The voluntary redemption is intended to give shareholders who will not benefit from reduced fees the opportunity to sell some or all of their shareholding in the Company.
The future of LCH.Clearnet has been unclear since October 2008, when the DTCC and LCH.Clearnet announced a proposed merger between the two companies. That merger fell apart in April 2009, generally believed to be due to the opposition of Euroclear, the European equivalent of DTCC.
According to an industry source close to DTCC: Cleaning up the shareholder situation is a long overdue move. I think market participants either want to see Euroclear and LCH.Clearnet fully combined or be separate. A 16% shareholding was big enough to give Euroclear a veto over any future ownership changes. It allows LCH.Clearnet to explore more ownership options in an independent way.
Giles TurnerNews Editor