Why the winner of the LSE bidding war will seek to kill the golden goose as quickly as possible.
Yesterday’s report by Phil Stafford in the FT
that the LSE would consider a sell-off of Clearnet to alleviate
any competition concerns over its proposed merger with Deutsche
Bourse is a side show, an interesting side show but a side show
There is no doubt that Clearnet is an important piece of
infrastructure in the European derivatives market, the clearing
house clears all Euronext’s continental business
(and would be naturally at home with the exchange group).
But in terms of competition, it is insignificant in the face
of LCH’s swaps clearing business SwapClear.
SwapClear is the reason why this bidding war will go on and on,
and the jewel in the LSE’s ever expanding
The world is changing. In the old world, decisions on where
to clear were based on where the broker or client wanted to
execute. In the new world, decisions on where to execute will
be based on where the broker or client wants to clear.
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