LCH.Clearnet, the Anglo-French multi-asset clearing house, expects to make announcement on its ongoing merger negotiations with the London Stock Exchange (LSE) “shortly”, but CEO Ian Axe declined to give a date in conference call following the release of the member-owned clearer’s 2011 results.
Axe said LCH.Clearnet would be “pleased to announce” an update soon on the exclusive talks with the exchange group, for which it provides a range of clearing services. The two parties entered exclusive talks in September 2011, after financial information and data provider Markit ended its interest on LCH.Clearnet.
For the year ended 31 December 2011, underlying revenues rose 16% to €387.2 million, with clearing and net investment income increasing 16% and 21% respectively. Net incomes rose to €21.2 million in 2011 from €19.1 million.
Axe attributed a 23% increase in equity clearing volumes to the extension of clearing to multilateral trading facilities Turquoise, owned by the LSE, and BATS Chi-X Europe, both of which recently introduced greater choice of clearing to trading members. He added that there was evidence that brokers are already “taking advantage” of the increased competitiveness of the equity clearing market in Europe.
Appointed last April, Axe said that the firm’s strategic focus for 2012 would centre on developing its risk and collateral management capabilities, particularly in over-the-counter markets. ForexClear, an OTC FX platform is ready to launch this year subject to regulatory approval, while LCH.Clearnet’s credit default swap service is scheduled for an upgrade during 2012. Axe predicted that OTC volumes would continue to grow, driven both by regulatory change and client demand.
In addition, Axe said the firm would be rationalising and “de-duplicating” platforms and resources in its increasingly commoditised listed equities and listed derivatives businesses with a view to passing on efficiencies to customers.