Paris
09 August 2017
Reporter: Jenna Lomax

LCH and Euronext secures 10-year deal on MiFID II derivatives


Euronext will sign a derivatives clearing agreement with LCH Group’s French arm in Q4 to ensure a continuity of clearing services after Brexit and once the second Markets in Financial Instruments Directive II (MiFID II) is finalised.

The deal allows for clearing services for listed financial and commodity derivatives for the next 10 years.

According to LCH, the new agreement will improve value proposition for customers and reduce clearing fees, while also providing continuity of service and economic returns for LCH SA.

LCH SA and Euronext also committed to reducing clearing fees by between 5 percent and 15 percent from January 2019, depending on each specific product and service.

The European stock exchange currently has a 2.3 percent stake in the LCH Group. The exchange will swap this in Q4 for an 11.1 percent minority stake in LCH SA “to allow Euronext to align its shareholdings with its commercial interests in the clearinghouse”.

Suneel Bakhshi, CEO of LCH Group, said: “Announcing this agreement is a significant achievement for the LCH Group and highlights the spirit of strong partnership with Euronext.”

“We are delighted to be able to offer continuity of services for clearing members and clients while also delivering best in class service and robust risk management across a range of cash and derivatives markets, in line with our open access principles.”

Christophe Hemon, CEO of LCH SA, added: “We are delighted to have reached agreement to continue providing clearing services to Euronext and its customers. Euronext’s transfer of its shareholding in LCH Group to LCH SA will also further deepen our long-standing relationship.”

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