(Alliance News) - London Stock Exchange Group PLC on Monday said it will only take a very minor revenue hit should a contract its clearing services arm has with Euronext NV be cancelled early.
Fellow stock exchange operator Euronext on Monday said that it now owns a clearing service, thanks to its April acquisition of Borsa Italiana, which included CC&G. CC&G is a clearing house in Milan.
The deal means Euronext no longer has to rely on LSE's LCH SA arm to provide clearing arrangements, and it can now use the services of its own units.
"Today, for the first time, thanks to the acquisition of CC&G in April 2021, Euronext is the owner of a multi-asset clearing house and is thus in a position to directly manage its clearing activities to complete its value chain. Euronext is determined to directly manage the clearing of its cash and derivatives flows. As of today, the only available concrete option is the European expansion of CC&G clearing activities," Euronext said on Monday.
London Stock Exchange Group noted Euronext's announcement. It said Euronext's LCH deal runs through to 2027. However, Euronext has "limited early termination rights", including one exercisable in January 2024.
"The provision of cash equities clearing services is subject to a 12-month notice period," LSE noted.
Though uncertain on timing and details, LSE added the potential impact to revenue is less than 1%.
"Euronext's announcement has no impact on LCH SA's RepoClear and CDSClear businesses or on SwapClear and ForexClear," the FTSE 100 constituent said.
"We will continue to work closely with Euronext under our existing partnership and look forward to continuing to offer our clearing services to our global customers, who benefit from access to our multi-asset offering."
LSE shares closed 0.4% lower at 7,090.00 pence each in London on Monday.
By Eric Cunha; ericcunha@alliancenews.com
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