LCH.Clearnet Ltd (“LCH.Clearnet”) has signed a new clearing arrangement with LIFFE, the international derivatives market of NYSE Euronext (NYX), further to LIFFE’s announcement of 25th March 2008.
Subject to regulatory approval, from March 2009 LIFFE will become the central counterparty for London-based LIFFE contracts. LCH.Clearnet will provide LIFFE with its proven risk management services and the existing clearing guarantee; and will continue to run its normal day to day operational clearing processes for LIFFE. In the event of a default, LCH.Clearnet will become the counterparty and will be fully responsible for the management of the default.
Members will continue to benefit from access to LCH.Clearnet’s risk management expertise and diversified default fund. Furthermore, LCH.Clearnet will continue to use LIFFE-owned clearing technology and the operational changes required by members should therefore be minimal.
Roger Liddell, chief executive, LCH.Clearnet said: “We are happy that this arrangement leaves our risk management processes intact. Members will continue to benefit from our services with the minimum of disruption. We enjoy a good working relationship with LIFFE and we shall continue to work with them on new initiatives, including credit default swaps.”
As part of the termination of the current clearing arrangements, LCH.Clearnet will receive a one-off payment of €260 million from NYSE Euronext.