In the wake of the failed merger between Deutsche Boerse AG and the London Stock Exchange Group (LSE), Euronext NV on Monday announced a deal with ICE Clear Netherlands to take over clearing for its financial derivatives and commodities markets.
Euronext was planning to acquire LCH.Clearnet SA from the LSE as part of an effort to address regulator’s concerns about the proposed Deutsche-LSE deal. However, that arrangement was contingent on the closing of the exchange merger.
Euronext says it’s still willing to acquire Clearnet, but the LSE has refused to engage in discussions about completing the sale. With its current clearing services agreement with Clearnet due to expire at the end of 2018, Euronext has now entered a deal with ICE Clear Netherlands that covers the clearing of derivatives for the next 10 years.
As part of the arrangement, Euronext will make a €10 million upfront investment in ICE Clear Netherlands. “Clearing operations will be run from Amsterdam and a new and innovative solution for asset financing, inventory management and physical delivery for commodities will be built by Euronext and operated from Paris,” it says.
Additionally, the firms says that they intend to cut clearing costs for customers with a 15% reduction in headline clearing fees, lower treasury management fees, and realizing capital efficiencies.
“Despite the prohibition of the merger between Deutsche Boerse AG and LSE Group by the EU Commission, Euronext has reaffirmed to both LSE and LCH Group its willingness to proceed with the acquisition of Clearnet for €510 million, and Euronext continues to remain a willing buyer of Clearnet. But in the absence of obtaining an agreement to complete this acquisition, Euronext is fully committed to securing the best long-term solution for its post-trade activities, in the interests of clients and shareholders,” says Stéphane Boujnah, CEO and chairman of the managing board at Euronext, in a statement.