London Clearing House ties up with Clearnet

Jean-Francois Theodore, chairman of the Paris Bourse, stepped up the pressure on the London Stock Exchange to join the three-way Euronext stock exchange alliance as he struck a deal to merge the clearing operations of three exchanges with the London Clearing House yesterday.

The new operation, bringing together LCH with the Paris-based Clearnet, will be the largest clearing organisation in Europe, with more than 50 per cent of the business in market-traded instruments in Europe.

David Hardy, LCH chief executive, said the combination should cut large users' clearing costs by at least 30-50 per cent.

Combined, the operations will clear 350 million of exchange-traded derivatives contracts a year and nearly 70 per cent of the cash equity trades Europe-wide.

Yesterday's deal follows the Euronext agreement a fortnight ago between the Paris, Amsterdam and Brussels stock and futures exchanges which has dramatically accelerated the pace of consolidation between the European markets.

Asked whether he thought yesterday's deal would act as a catalyst for the London Stock Exchange to join Euronext, Mr Theodore said: "It certainly would be a facilitator." He added:"I have already said that Euronext would be very keen to have closer ties with London institutions and the London Stock Exchange."

An LSE spokesman said the deal would not affect the LCH's relationship with the Exchange. Privately, officials said that this should not be seen as a stepping stone towards the exchange joining Euronext.