DTCC and LCH.Clearnet plan €739 million merger
The Depository Trust and Clearing Corporation (DTCC), the largest clearing house in the US, and European clearer LCH.Clearnet have agreed to merge, a move the companies claim will create the world's largest clearing house.
Subject to regulatory approval, DTCC would pay LCH.Clearnet's shareholders up to €10 a share, valuing the company at €739 million. Payment would be made through a combination of DTCC shares, shares in a new holding company for LCH, and a special LCH dividend.
LCH.Clearnet chief executive Roger Liddell will remain as chief executive of the new LCH holding company after the takeover, with DTCC chairman Donald Donahue as chairman. DTCC's European subsidiary, EuroCCP, will be rolled into LCH.Clearnet to form a single European clearing house.
More details should be announced in March 2009, DTCC said.
After the merger, DTCC said former LCH shareholders would face "mandatory rebalancing" of their holdings, to bring ownership of the merged company into line with its use - as is already the case for the user-owned DTCC. This would be completed within 18 months of the merger - and within three years, LCH.Clearnet would have moved to an "at-cost" pricing approach, already the case for DTCC.
The merger represents a potential 7-8% reduction in operating costs, DTCC said. It follows growing pressure for central clearing of over-the-counter derivative trades, with counterparty risk an increasing concern of market participants after the respective collapses of Bear Stearns and Lehman Brothers.
See also: Banks move towards clearing for FX, interest rate and equity
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Exchanges
Asia’s ETF assets on the rise – HKEX presents the results of Asia ETF survey 2019
Asia’s total ETF assets surged by 23.9% in the first half of 2019 thanks to an increasing adoption of ETFs into investment portfolios. According to a survey conducted by Hong Kong Exchanges and Clearing (HKEX), asset expansion in Asia’s ETF market is set…
NYSE Offers Exchange-Calculated Bitcoin Index, with More to Come
NYXBT will initially be based off data from Coinbase Exchange.
Deutsche Börse to set up Europe's first multi-asset RMB platform
German exchange group signs joint venture deal with CFFEX and Shanghai Stock Exchange
Exchange Revenue Figures Rise, Fall; Data Revenues Continue Steady Increase
A mostly positive mix of Q1 results also yield big increases in data revenues for some exchanges.
Lift-off for ASX Aussie dollar swap clearing business
Volumes jump following revamp of Sydney bourse's clearing incentive scheme
Exchange Data Revenues Make Positive Start to 2015
Acquisitions made up for some shortfalls in exchange revenues
CME looks to local banks for FX liquidity in emerging markets
Chicago-based exchange targets China, India and LatAm growth