London Stock Exchange Group today confirmed plans to pursue a dual CCP competitive clearing model for the London market. Subject to final terms being agreed, X-Clear will join LCH.Clearnet as a provider of CCP services to the Group’s London equity market offering.
The decision reflects the Group’s desire to ensure that post trade services enhance the competitiveness of its market offering and provide full, active and timely support for its product and service innovations. It believes that the provision of two competing CCPs in the London market should continue to ensure effective price competition at the clearing layer.
The Group intends to use X-TRM, the award winning post-trade router of Monte Titoli, to manage the trade flows between two competing CCPs and onward to settlement across its markets. X-TRM will be integral to the successful introduction of CFDs onto the London Stock Exchange early next year.
The Group will also pursue the international development of its post trade assets, which already offer service and efficiency levels not matched elsewhere in Europe. It will develop the scale and scope of these services by leveraging its skills and capabilities to support its international growth and the Group’s product innovation initiatives across its diverse range of asset classes.
The proposed model for London forms part of an ongoing review of post trade services across the Group’s markets in an evolving marketplace. Post trade services are integral to the competitiveness of exchange trading services, as the Group continues to innovate at an ever greater pace, and to do so cost and time efficiently.
In its deliberations, the Group is mindful of the European Code of Conduct on Clearing and Settlement. This Code has achieved many favourable outcomes as a direct result of the price transparency and unbundling provisions. In addition, the policy goals of more competitive pan-European offerings appear to have been achieved, although the aspects of the Code relating to interoperability raise important implementation, market efficiency and systemic risk issues.
