London Clearing House to expand

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The Independent Online
The London Clearing House (LCH) will be looking at opportunities for extending its clearing services to other markets after new owners take control later this week, its chief executive said yesterday.

"I'm sure the new board will want to have a look at that early on ... we've got to see if there is anything else that could be done with the business, which could benefit those people who have just bought it," said David Hardy, chief executive of the LCH.

"There are likely to be a number of initiatives around but clearly we don't want to go around treading on other people's toes," he said.

The LCH is broadening its present narrow ownership base of Barclays, Lloyds, Midland, NatWest, Standard Chartered and Bank of Scotland to include the 126 other clearing members of London's futures exchanges. They will be paying just under pounds 300,000 apiece for their stakes in the LCH.

The main futures exchanges, the London International Financial Futures and Options Exchange (Liffe), the London Metal Exchange (LME) and the London Petroleum exchange, will also become shareholders with a combined stake of 25 per cent.

The new clearing members will contribute to a special pounds 150m default fund to be backed by a three-year insurance policy, providing an additional pounds 100m worth of cover.

The LCH first suggested the alterations to its structure in June. Some 33 members have declined to accept the new structure.

The new structure will give a closer focus on other markets such as "swaps", arranged privately between firms and not on any recognised exchange.