Press releases 2003

25 November 2003

London Stock Exchange signs new clearing services agreement with London Clearing House

The London Stock Exchange announced today that it has signed a new clearing services agreement with London Clearing House (LCH).

Under the terms of the new agreement, LCH will reduce its clearing fees by 25 per cent for trades carried out on the London Stock Exchange.  The new tariff will take effect from January 2004.

In addition, the Exchange has accepted Euronext’s offer of one of its permanent seats on the LCH.Clearnet board, which will help ensure exchange neutrality at board level.

The Exchange has negotiated its new clearing agreement with LCH without a lock-in period; the notice period remains at twelve months.  The short-term nature of this contract will perpetuate competitive tension between for-profit clearing organisations in the best interests of the UK equity market and the Exchange’s strategic flexibility.

The Exchange’s decision to remain with LCH follows a tender process for its clearing business, which saw a strong competing offer from Eurex.  The quality and scope of Eurex’s proposal reflects their position as clearer to the largest derivatives market in the world.
 
Clara Furse, the Exchange’s Chief Executive, said:

“The LCH.Clearnet merger has changed the European clearing landscape into one of for-profit central counterparties.  Negotiations over the summer and autumn, in which we created a new competitive tension between clearing providers, have been rewarding.  We are grateful for the support of our customers that enabled us to achieve substantially improved terms for them and the Exchange.  We are pleased to have concluded this agreement with LCH, who have accommodated all of our requests and with whom we look forward to building a commercial relationship.”

John Serocold, a director of the London Investment Banking Association (LIBA), said:

“I believe LIBA members will be pleased with this outcome.  It is welcome that the Exchange has brought some competitive tension to the market for clearing services and market users should benefit from this.”

- ends -

For further information, please contact:

John Wallace   Press Office  +44 (0)20 7797 1222