LSE to renegotiate LCH deal
15 Dec 2012
The London Stock Exchange is attempting a renegotiation of its deal to buy LCH Clearnet, which plays a key role in clearing share trades, following a demand from regulators for it to hold more cash.
In April, the LSE agreed to buy 60 per cent of the company for €463 million and cleared a hurdle yesterday with the Office of Fair Trading giving the go ahead.
However, according to analysts, it was likely to secure a lower price due to new business rules which could end up leaving the clearing business needing another €375 million.
Clearing houses ensure completion of trades if a bank or another party went bust, which could leave them facing a huge bill.
Following the global financial crisis, regulators want clearing houses to hold more capital.
Shares in the LSE were up 42p – or 4.1 per cent – to close at £10.52 amid hopes of a possible discount.
Reports yesterday suggested that the LSE may reduce its offer for the LCH stake by €200 million. Speculation was sparked by the Royal Bank of Canada surmising that the amount of additional capital required at LCH would be about €220 million.
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