LSEG has partnered with 11 leading global banks, in a move which will see the Group receiving investment in its Post Trade Solutions business.
Daniel Maguire
As part of the deal, the investing banks will become shareholders in the business, taking a 20% stake in exchange for an aggregate cash consideration of £170 million, totalling the whole value of Post Trade Solutions to £850 million.
Specifically, the 11 banks included in the investment are: Bank of America, Barclays, BNP Paribas, Citi, Deutsche Bank, HSBC, JP Morgan, Morgan Stanley, Nomura, Societe Generale and UBS.
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The move will also see LSEG gaining an increased proportion of revenue surplus from the SwapClear business, with revenue surplus share for the banks which are members of SwapClear reducing to 15% in 2025, and a subsequent 10% from 2026.
Daniel Maguire, head of markets at LSEG and chief executive of LCH Group, said: “Our SwapClear business was at the forefront of innovation when it was founded in collaboration with our clearing members 25 years ago – and that spirit of innovation and partnership continues today. Our clearing services have been highly successful in generating substantial growth and ensuring robust risk management for the OTC derivatives market. This has only been possible thanks to our long-term strategic partnership with our customers.
“With this proven track record of success, I’m pleased that our partners are committed to continuing the approach with our Post Trade Solutions business, where we collectively see an opportunity to bring material efficiencies across capital, risk and operations to the bilateral OTC derivatives market.
The partnership is expected to allow the investing banks to benefit from their input into Post Trade Solutions, which spans Acadia, Quantile, SwapAgent and TradeAgent businesses.
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In addition, three directors nominated by the 11 investing banks will also become members of the board of Post Trade Solutions.
“Our partnership with SwapClear has been highly successful in growing and scaling the first interest rate swaps clearing service into an established and profitable business,” said Troy Rohrbaugh, co-chief executive, commercial and investment bank at JP Morgan.
“We see great opportunity for the many benefits associated with clearing such as risk management, standardisation and efficiencies, to be replicated by those trading uncleared derivatives.”