The G20 OTC clearing mandate has accelerated the race for domination among exchange owned clearing houses. Portfolio margining will be at the heart of success and the London Stock Exchange has taken an early lead.
The LSE’s agreement to acquire LCH. Clearnet,
which was signed last month, heralds the end of the independent
multi-asset utility clearing house in Europe. However,
according the LSE, it is not the end of the horizontal clearing
The LSE has long been a critic of vertical siloes, clearing
models in which an exchange owns its own clearing house. It
argues that the model is uncompetitive and prevents new
entrants into the market. While the LCH deal could level
accusations of hypocrisy, the exchange went to great pains to
point out that its acquisition of LCH.Clearnet does not
represent a shift to a vertical silo.
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