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.
More on Exchanges
NYXBT will initially be based off data from Coinbase Exchange.
German exchange group signs joint venture deal with CFFEX and Shanghai Stock Exchange
A mostly positive mix of Q1 results also yield big increases in data revenues for some exchanges.
Volumes jump following revamp of Sydney bourse's clearing incentive scheme
Sign up for Risk.net email alerts
Sponsored video: MarketAxess
Sponsored video: Tradeweb
Multifonds talks to Custody Risk on being nominated for the Post-Trade Technology Vendor of the Year at the Custody Risk Awards 2014
Sponsored webinar: IBM Risk Analytics
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.