Clearstream to Settle LCH-Cleared Equity Contracts

The increasing demand for such instruments has accelerated this partnership.

Photo: FM

Clearstream Banking and LCH have joined hands to make LCH-cleared equities contracts eligible for settlement within Clearstream Banking, thus strengthening their post-trade collaboration.

Announced on Tuesday, the new partnership will facilitate the clearance of all global depository receipts through Clearstream in the third quarter of 2020. This includes the ones listed on London Stock Exchange’s International Order Book as well as the full suite of internationally settled exchange-traded products (ETPs), such as exchange-traded funds (ETFs), exchange-traded notes (ETNs) and exchange-traded commodities (ETCs).

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Commenting on the partnership, Arnaud Delestienne, head of Eurobonds at Clearstream, said: “This partnership demonstrates our continuous support for increased interoperability across the European post-trade landscape. Going forward, both LCH and Clearstream clients stand to benefit from operational risk reduction and increased market efficiency. This perfectly aligns with our services as issuer CSD, always offering best-in-class flexibility and investor reach.”

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Growing demand for depositary receipts and ETPs

The announcement highlighted the growing popularity of the global depositary receipts that saw an average daily trading turnover of $570 million on London Stock Exchange’s International Order Book during Q1 2020. Moreover, high diversification and liquidity along with low cost also increased the demand for ETPs.

All these factors have weighed in to prompt the two companies to ink the partnership deal.

“We are pleased to be working with Clearstream to offer a choice of settlement venues for EquityClear’s clearing members. Our open-access philosophy and customer partnership approach enables us to work with a number of different trading platforms and settlement venues to help drive efficiencies for the market as a whole,” Alex Krunic, head of equities, LCH, said.

“Connecting LCH to our custody offering for domestic markets is a milestone for us,” Thilo Derenbach, head of European custody product at Clearstream, added. “This provides yet another building block for European investors in their efforts to consolidating their entire trade flows, CCP-cleared or not, within Clearstream.”

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