Clearstream and LCH establish new post-trade connection

Exchange traded products and global depository receipts cleared through LCH can be settled on Clearstream from the third quarter onwards.

LCH-cleared equities contracts will now be eligible for settlement within Clearstream Banking as part of a new connection between both organisations.

As part of the new agreement, all global depository receipts listed on London Stock Exchange’s International Order Book are expected to be available for settlement through Clearstream in the third quarter of 2020.

Other products included in the connection will be exchange-traded funds (ETFs), exchange-traded notes (ETNs) and exchange-traded commodities (ETCs).

Average daily trading turnover for global depository receipts hit $570 million on London Stock Exchange’s International Order Book during Q1 2020. Meanwhile, exchange traded products – notably ETFs – have also been continuously in demand, as investors continue to shift from active to passive products.

“This partnership demonstrates our continuous support for increased interoperability across the European post-trade landscape,” said Arnaud Delestienne, head of Eurobonds at Clearstream.

“Going forward, both LCH and Clearstream clients stand to benefit from operational risk reduction and increased market efficiency. This perfectly aligns with our services as issuer CSD, always offering best-in-class flexibility and investor reach.”

LCH’s head of equities, Alex Krunic, added that the move was part of the clearing house’s open access philosophy and the customer partnership approach enables the organisation to work with a number of different trading platforms and settlement venues to help drive efficiencies for the market.