The proposed merger between DTCC and LCH.Clearnet has broken down, as DTCC has begun looking for other partners in its attempt to create a trans-Atlantic post-trade solution.
In October 2008, DTCC and LCH.Clearnet singed non-binding heads of terms regarding the proposed merger of the two companies.
LCH.Clearnet has refused to comment on the breakdown in negotiations. According to a statement on the DTCC website: LCH.Clearnet has not agreed on a basis for consummating the proposed merger with DTCC and, after consultation with our Board of Directors, regrettably DTCC sees no choice but to pursue other strategic alternatives to develop seamless transatlantic clearing services to support the needs of our customers and the industry.
The merger between LCH.Clearnet and DTCC may have cost in the region of USD1 billion, giving rise to the possibility that the price and financing of the deal caused the breakdown in the relationship.
In December 2008, LCH.Clearnet terminated the exclusivity agreement with DTCC to permit it to enter into dialogue with another party. The other party, a 12-strong consortium of users including Deutsche Bank, JP Morgan and ICAP, hopes to have a concrete proposal for LCH.Clearnet by the end of May.