Euronext has signed a binding “heads of terms” agreement with the Intercontinental Exchange to use ICE Clear Netherlands for its derivatives markets.
The two companies said they expect to complete a formal clearing services agreement by the end of the second quarter and expect to migrate Euronext’s financial and commodity derivatives to the Amsterdam-based clearinghouse in the second half of 2018.
Under the terms of the agreement announced in April, Euronext will make an “upfront” €10 million investment in ICE Clear Netherlands and will receive income from the provision of clearing services. Euronext also said the deal will lead to lower costs for customers, with a 15% reduction in clearing fees and lower treasury management fees.
Euronext executives said the move was a response to the collapse of the proposed merger between Deutsche Börse and the London Stock Exchange Group. LSE had agreed to sell LCH.Clearnet SA, its Paris-based clearinghouse, to Euronext in order to address antitrust concerns, but the deal was contingent on the merger. Euronext currently relies on LCH.Clearnet SA for derivatives clearing, but the arrangement is due to expire in December 2018.
Euronext CEO Stéphane Boujnah said his company “continues to remain a willing buyer” for the Paris-based clearinghouse, but in the absence of an agreement, “Euronext is fully committed to securing the best long-term solution for its post-trade activities, in the interests of clients and shareholders.”
ICE bought a majority stake in the Dutch clearinghouse in December 2014. The clearinghouse currently provides clearing services for equities and equity index derivatives listed on TOM, a multilateral trading facility based in the Netherlands. TOM is in the process of winding down its operations, however.
