LSE’s clearing house move may be delayed

Announcing flat profits of £217.2m in the first half, Xavier Rolet refused to say the takeover of LCH would complete this year despite the group having earlier said it expected this to happen.

“We are in conversations with LCH and the authorities and we’ll have to see what they decide. I can’t speculate on the outcome or the timeline,” said Mr Rolet.

The LSE wants LCH because the clearing house would reposition the UK exchange to move aggressively into derivatives ahead of regulatory plans to overhaul this market.

Clearing houses, which sit between trading firms, insuring them against losses in the event of a counterparty default, have taken on greater importance since the collapse of Lehman Brothers four years ago.

Regulators want to force more trading through such vehicles to help guarantee smoothly functioning markets even at times of stress.

The LCH deal was agreed by shareholders of both sides in April, leaving it only needing regulatory approval to go through, something the LSE has said it expected to happen in the fourth quarter of 2012.

But the terms of the acquisition were called into question by analysts in September when the European Commission proposed rules for clearing houses that would, if passed, leave LCH needing to boost its regulatory capital by more than 300 million euros.

The aim of this would be to bolster LCH’s own position, but it could also eat into the returns it generates. Mr Rolet said yesterday the LSE would update the market on the outcome of these talks “in due course”.