Last year's £1.63bn acquisition of Borsa Italiana by the
London Stock Exchangegives it a clearing and
settlement platform that will allow it to offer clearing services
directly for UK trades for the first time.
The London Stock Exchange plans to transfer trading from Borsa
Italiana to its own Tradelect platform in September. Tradelect will
send these trades to the clearing and settlement platform, ensuring
the seller is paid and the stock is transferred to the buyer.
The move could pave the way for the the London Stock Exchange to
provide similar in-house clearing service for UK share deals. The
London Stock Exchange currently subcontracts its clearing to
LCH.Clearnet.
The Financial Services Authority set a precedent that the London
Stock Exchange could follow last month when it give approval for
IntercontinentalExchange to run its own clearing system in
London.
A spokesperson for the London Stock Exchange said the firm is
"exploring the whole clearing issue in depth, taking into account
the recent changes in the landscape".
"Our priority will be to build on our record of driving savings
for the market in post-trade services. Whatever we decide, we have
very efficient [clearing] assets [with Borsa Italiana], which
provide excellent value in the Italian market, and we value the
additional strategic flexibility that this gives us," the London
Stock Exchange said.
Bob Mcdowall, an analyst at TowerGroup, there are no firm plans
for the London Stock Exchange to start clearing its own share
trades. But he said increased competition from new trading venues
is making exchanges look for additional business.
"Exchanges are looking for new sources of revenue because they
have to compete with new venues and the clearing and settlement
technology of Borsa Italiana could give the London Stock Exchange
an opportunity to expand and develop clearing services across the
combined company," he said.
The London Stock Exchange is facing new competition. Trading
platforms Turquoise, Bats Trading and Nasdaq OMX exchange each plan
to launch pan-European share trading systems in September.
The Borsa Italiana clearing business contributed £37.4m in
revenues to the London Stock Exchange in the past 12 months.
This could increase significantly if the clearing of trades
completed in London go through the system.
The London Stock Exchange would have to get approval for
creating its own clearing service from the Office of Fair Trading
because of competition issues and the treasury as well as the
Financial Services Authority.