Big US and UK clearing houses agree to merge
Thursday 23 October 2008
The American securities clearing house Depository Trust & Clearing Corporation (DTCC) and its European rival LCH.Clearnet have agreed to combine to create the world's biggest clearing house in an effort to cut trading costs.
Under the terms of the deal, expected to close in the second quarter of next year, DTCC will buy LCH for as much as €739m (£583m), or €10 per share, giving LCH shareholders 34 per cent of the combined entity. LCH's biggest shareholder, Euroclear, which holds just under 16 per cent of the company, has agreed to the deal in principle. The combined entity will be user-owned and run like DTCC as a not-for-profit company.
Brokers pay fees for clearing, or post-trade processing services, which include verifying that a buyer has funds to execute a trade. The combined company would provide clearing for trades in equities, fixed-income securities, exchange-traded derivatives and commodities, mutual funds, annuities and over-the-counter products such as interest rate swaps, credit default swaps, carbon emissions and freight contracts.
The deal could help bring down equity clearing costs in Europe, which are higher than those in the US. The companies plan to cut 7 to 8 per cent of combined costs, or about €50m a year.
The merger comes after the EU Internal Market commissioner, Charlie McCreevy, said last week that there is now a pressing need for a central clearing counterparty to trade derivatives. He referred to a vacuum in the system since the collapse last month of Lehman Brothers, which negotiated many of the world's derivative contracts.
"We expect we will get a lot of attention from regulators – and that is a process we are keen to embark upon," said Roger Liddell, LCH.Clearnet's chief executive.
Sales of the tablet are set to fall again, say analysts
Follow the latest updates from the Monday night Premier League fixture
Met Police confirm there was a 'minor disturbance' and no-one was arrested
George Lucas criticises the major Hollywood film studios
Does Chris Grayling realise what a vague concept he is dealing with?
Trend which requires crisps, a fork and a strong stomach is sweeping Mexico's streets
Concerns raised phenomenon is threatening resort's image as a family destination
I Am Bread could actually be a challenging and nuanced title
Peter Biaksangzuala died from his injuries in hospital on Sunday
- 1 Ebola outbreak: What is bushmeat – and is it to blame for the disease that has killed thousands?
- 2 Star Wars memorabilia called a 'bit of plastic' on Antiques Roadshow by Fiona Bruce valued at £50,000
- 3 Drink alcohol and eat meat to improve male fertility - but cut down on coffee, studies suggest
- 4 Russell Brand might seem like a sexy revolutionary worth getting behind, but he will only fail his fans
- 5 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
Sophia Loren: How I rejected Cary Grant and 'pulverised' Marlon Brando with my eyes
Ebola outbreak: What is bushmeat – and is it to blame for the disease that has killed thousands?
'Russian submarine spotted' by Swedish military off coast of Stockholm
Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
Oscar Pistorius sentence: Athlete's wealth and notoriety provoke an overdue debate on South African prisons
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Sorry Judy Finnigan – Ched Evans is no less sickening than an alleyway rapist
Residents should throw a street party and mix with immigrant neighbours, councils told
Workers 'could be forced to pay £5 a week' to get benefits
Russell Brand threatened with arrest after filming outside Fox News headquarters
Amal Alamuddin calls for the return of the Elgin Marbles from Britain: 'Injustice has persisted for too long'
iJobs Money & Business
£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...
£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....
£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...
£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...