Euronext Cements Relationship with LCH SA
On Nov. 1, Euronext formally renewed its clearing agreement with the Paris-based branch of LCH after extensive negotiations with LSE Group, the owner of LCH, on the terms of their relationship. Under the new agreement, LCH SA will provide clearing for Euronext's financial and commodity derivatives for an additional 10 years. In addition, Euronext agreed to swap its 2.3% stake in LCH Group for an 11.1% stake in LCH SA. Once this transaction closes, Euronext will recognize a net capital gain of around €24 million ($28 million). Euronext also said the agreement provides a "comparable revenue sharing mechanism" that will deliver income from clearing to Euronext, and provides Euronext with certain rights over any future sale of LCH SA. The announcement came several months after the two sides agreed on the overall terms of the deal. Euronext had expressed an interest in buying the entire Paris-based clearinghouse, but that offer fell by the wayside when the proposed merger of LSE with Deutsche Boerse failed.
