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Euronext assessing how to cut out London Stock Exchange clearing

By Reuters

By Huw Jones

LONDON – Pan-European financial markets operator Euronext said on Thursday it has begun assessing how to cut reliance on a London Stock Exchange clearing house in Paris after acquiring an alternative in Italy.

Euronext, which runs the Paris, Milan and Amsterdam stock markets among others, uses the LSE‘s LCH SA clearing house for its share trades, but since acquiring Borsa Italiana from the London exchange in April, it now has its own clearing house, CC&G.

Work has begun on a possible switch for customers.

“It’s a work in progress to assess how much, which assets, at what pace, with which clients and in what time frame,” Euronext Chief Executive Stephane Boujnah told reporters during a second-quarter results conference call.

“It’s a very heavy-lifting project we are willing to implement if appropriate,” he said, adding that full ownership of CC&G – Euronext owns 11.1% of LCH SA – creates new incentives for the exchange.

It is the latest sign of how the European Union wants to build “strategic autonomy” in financial services to cut reliance on London after Britain left the bloc last December.

Brussels is piling pressure on banks to shift clearing in euro derivatives, which LCH in London dominates, to Deutsche Boerse in Frankfurt.

Euronext said net income rose 5.6% to 86.6 million euros ($102.9 million) in the second quarter from a year ago, helped by consolidating Borsa Italiana into the group.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 53.8% to 192.9 million euros in the three months, with adjusted earnings per share up 26.8% at 1.43 euros.

Borsa Italiana revenue growth was mainly driven by the “remarkable performance” of the Italian exchange’s MTS fixed income platform, Euronext said.

Boujnah said MTS could capture even more trading flows from EU plans to issue bonds to finance the bloc’s recovery from COVID in coming years.

Euronext will release its new strategic plan and 2024 group guidance in November.

($1 = 0.8416 euros)