Exchange in win, win situation in LCH fight

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Transatlantic stock exchange NYSE Euronext stands to gain whether or not its rival the London Stock Exchange snatches up hotly contested clearing house LCH.Clearnet – given that NYSE is LCH’s biggest shareholder.

LSE chief executive Xavier Rolet entered exclusive talks to buy LCH.Clearnet, the bourses’s main clearing provider, in Septem- ber.

But analysts have argued NYSE should look afresh at LCH after its planned merger with Deutsche Bourse collapsed last month, and speculation mounted this week with the LSE seemingly no closer to a deal as its LCH talks entered their sixth month.

NYSE could use its powerful position as a 9 per cent shareholder in LCH.Clearnet to stall the LSE deal, to muscle in on it, or to take the money from a sale and use it to set up its own rival clearing business.

“Given NYSE Euronext is LCH’s largest shareholder, it would be crazy to think they have not looked at the LCH,” said Peter Lenardos, analyst at RBC Capital Markets.

Both exchange groups have seen recent merger attempts collapse: Deutsche Boerse’s bid for NYSE Euronext failed in February when it was blocked by European competition regulators, and the LSE’s attempt to scoop up Canadian peer TMX collapsed last year after shareholders objected to the deal.

The terms of the LSE’s bid for LCH have not been disclosed, but it was reported to be offering 1 billion euros ($1.34bn) for 51 per cent of LCH – or 21 euros a share – nearly double a bid by data vendor Markit of 12 euros a share.