London Stock Exchange offers clearing technology

The London Stock Exchange is using a technology it bought last year to offer clearing services for UK-traded stock.

The London Stock Exchange is using a technology it bought last year to offer clearing services for UK-traded stock.

The company has been considering alternative clearing systems since the Financial Services Authority (FSA) set a precedent when it gave approval for IntercontinentalExchange to run its own clearing system in London.

The new service will use the X-TRM technology, acquired from Borsa Italiana in June 2007 when it bought the Milan-based excahange for £1.63bn. The technology routes trades from the the Tradelect core trading platform to clearing services.

The London Stock Exchange currently subcontracts its clearing to LCH.Clearnet. X-Clear, a clearing service based in Switzerland, will run alongside it to offer a choice.

Speaking to Computer Weekly in June, following the FSA's decision, a spokesperson for the London Stock Exchange said the firm was "exploring the whole clearing issue in depth, taking into account the recent changes in the landscape."

The exchange is under increasing pressure from new entrants to the trading sector. These companies, including Turquoise and Chi-X, are taking advantage of the market liberalisation created by the Markets in Financial Instruments Directive. This EU law came into force in November last year.

Bob Mcdowall, said the London Stock Exchange needs to increase its services. "It has to spread its revenues and portfolio of services. Using technology it acquired is a good idea because it is putting it to revenue generating uses."

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