LCH.Clearnet is seeking to expand its footprint in the US by striking a preliminary agreement to acquire the International Derivatives Clearing Group from Nasdaq OMX.
The company, which already operates an interest rate clearing service in the US with SwapClear, says that by acquiring IDCG it would better serve buy-side market participants by offering more choice.
LCH.Clearnet says the acquisition of IDCG remains subject to negotiations and certain conditions including entering into a definitive agreement and that there can be no certainty that the transaction will proceed. If it does proceed, it would become sole owner of IDCG and Nasdaq OMX would become a shareholder of LCH.Clearnet.
“The acquisition of IDCG would be a natural expansion of LCH.Clearnet’s horizontal clearing model and further evidence of its commitment to the SwapClear service joining the existing ‘one-pot’ cross-margining arrangement between New York Portfolio Clearing, The Depository Trust and Clearing Corp. and NYSE Euronext," LCH says in a statement. "To date, the SwapClear service has cleared a total client notional of more than $686 billion."
The London Stock Exchange, meanwhile, is set to take control of LCH.Clearnet after agreeing to buy it for $615 million in March. That deal still needs to be cleared by regulators and is expected to be completed by the fourth quarter.
“LCH.Clearnet is committed to providing end-users with a broad range of clearing services for their over-the-counter trades,” SwapClear chief executive Michael Davie says. “This strategic acquisition would complement our US offering, where we are seeing accelerating client take-up for the SwapClear service.”
Eric Noll, Nasdaq OMX’s executive vice president of transaction services US and UK, adds, “As a future shareholder and a supporter of horizontal clearing models for our global marketplace, we are pleased to begin our strategic relationship with LCH.Clearnet on both sides of the Atlantic.”