LCH.Clearnet Group has completed the purchase of Nasdaq OMX’s International Derivatives Clearing Group (IDCG), giving the Anglo-French clearer the opportunity to grow the products and services it offers in the US.
Using the acquisition, LCH.Clearnet will establish a US-domiciled central counterparty and develop cross-margining initiatives with New York Portfolio Clearing (NYPC), Depository Trust and Clearing Corporation and NYSE Euronext.
Under the Dodd-Frank Act, a large portion of the OTC derivatives market will be brought on exchange-like platforms and subject to central clearing. As a result, market participants will have to post greater margin against their swaps exposures, which has led clearers to look for correlations between listed and OTC instruments in an effort to reduce the collateral burden. NYPC, for example, enables the cross-margining of interest futures positions with fixed income cash positions.
LCH.Clearnet extended its SwapClear interest rate swap clearing service to US futures commission merchants in March 2011.
“This transaction is a strategic move to expand our US footprint and provide clients with additional flexibility and choice. It underscores our continued commitment to a horizontal clearing model for a global marketplace,” said Ian Axe, CEO, LCH.Clearnet.
Under the terms of the acquisition, Nasdaq OMX will obtain a 3.7% stake in LCH.Clearnet Group and IDCG will be renamed LCH.Clearnet LLC and re-launched in Q4, subject to regulatory approval. At the start of this year, the London Stock Exchange Group finalised the purchase of a 60% stake in LCH.Clearnet Group. The acquisition is also scheduled for completion in Q4.