Amsterdam, Brussels, Lisbon, London, New York, Paris – 28 March 2012 – NYSE Euronext today outlined its European clearing strategy and implementation plan, detailing the steps that will be taken to leverage its NYSE Liffe derivatives clearing platform to consolidate all of its European derivatives into a single derivatives clearing house, and delivering significant operational and margin efficiencies for clients.
NYSE Euronext outlines European clearing strategy and implementation plan
“Our clients have long asked for a consolidation of clearing arrangements and the strength of our European derivatives business allows us to deliver meaningful benefits for them in the form of capital efficiencies and savings,” said Duncan Niederauer NYSE Euronext CEO. “Formalizing these steps now and communicating them clearly to our customers will allow them to more effectively plan their capital allocation needs and will enhance their operational stability in a highly competitive and fluid environment.”
NYSE Euronext detailed the following steps:
- NYSE will build on the recent investments made in NYSE Liffe Clearing, the Central Counterparty to all trades conducted on the NYSE Liffe market in London, and will now complete the project to bring in house all remaining functionality currently out-sourced to LCH.Clearnet Ltd.
- NYSE Euronext expects the fully self-sufficient Recognised Clearing House (RCH) in London to be completed, licensed and operational by the summer of 2013. The clearing of all of NYSE Liffe’s London contracts will transition into the new RCH at that time.
- Accordingly, the company intends to give 12 months termination notice to LCH.Clearnet Ltd. in mid- 2012 with respect to its current outsourcing arrangements with LCH.Clearnet Ltd. for banking, guarantee and default management.
- Clearing for NYSE Euronext’s derivatives business traded in Amsterdam, Brussels, Lisbon and Paris, currently cleared with LCH.Clearnet SA in Paris, will be transferred to the new RCH in London early in the first quarter of 2014, subject to regulatory approval and finalization of precise timings with LCH Clearnet SA. No change will be made to the trading of continental derivatives, which will continue to be executed on NYSE Euronext markets in Amsterdam, Brussels, Lisbon and Paris.
The aggregation of continental derivatives business with the London derivatives business in the same clearing house will release substantial capital savings for market participants, as a result of margin offsets across highly correlated products. Derivatives users will also benefit from substantial operational synergies, as a result of the single technology platform and common operating procedures.
- In completing the European clearing development, NYSE Euronext expects to invest around US$85m over the next two years, of which approximately 70% will be in the form of capital expenditure. This investment will realize significant annualized net cost savings of around $30m from in-sourcing those clearing services currently provided to NYSE Liffe by LCH.Clearnet Ltd. In addition, new revenue streams will accrue from 2014 from NYSE Euronext continental derivatives clearing and from other new post-trade business opportunities including OTC clearing.
- With respect to the clearing of NYSE Euronext’s regulated cash markets, NYSE Euronext intends to negotiate a new long term arrangement with LCH.Clearnet SA, preserving and strengthening the vital role played by Paris in the European financial markets. Subject to appropriate agreement on commercial and governance terms, the new agreement would replace the current arrangements which terminate in December 2013. Entering into a new contractual arrangement with LCH.Clearnet SA answers the strong requirement from clients that cash markets clearing is performed under a horizontal model, with the potential to allow for more consolidation and the attached economies of scale, in a highly competitive environment.
Caroline Nico + 33 1 49 27 10 74
James Dunseath +44207 379 2789
Robert Rendine +1 212 656 2180
NYSE Euronext Investor Relations
Stephen Davidson +1 212 656 2183
About NYSE Euronext
NYSE Euronext (NYX) is a leading global operator of financial markets and provider of innovative trading technologies. The company's exchanges in Europe and the United States trade equities, futures, options, fixed-income and exchange-traded products. With approximately 8,000 listed issues (excluding European Structured Products), NYSE Euronext's equities markets — the New York Stock Exchange, NYSE Euronext, NYSE Amex, NYSE Alternext and NYSE Arca — represent one-third of the worlds equities trading, the most liquidity of any global exchange group. NYSE Euronext also operates NYSE Liffe, one of the leading European derivatives businesses and the world's second-largest derivatives business by value of trading. The company offers comprehensive commercial technology, connectivity and market data products and services through NYSE Technologies. NYSE Euronext is in the S&P 500 index, and is the only exchange operator in the Fortune 500. For more information, please visit: www.nyx.com.
Disclaimer and Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements, including forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning NYSE Euronext's plans, objectives, expectations and intentions and other statements that are not historical or current facts. Forward-looking statements are based on NYSE Euronext's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Factors that could cause NYSE Euronext's results to differ materially from current expectations include, but are not limited to: NYSE Euronext's ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk and U.S. and global competition, and other factors detailed in NYSE Euronext's 2011 Annual Report on Form 10-K and other periodic reports filed with the U.S. Securities and Exchange Commission or the French Autorité des Marchés Financiers. In addition, these statements are based on a number of assumptions that are subject to change. Accordingly, actual results may be materially higher or lower than those projected. The inclusion of such projections herein should not be regarded as a representation by NYSE Euronext that the projections will prove to be correct. This press release speaks only as of this date. NYSE Euronext disclaims any duty to update the information herein.