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SGX may acquire stake in LCH.Clearnet

The Singapore Exchange (SGX) is negotiating with London-based LCH to purchase a stake in the transatlantic clearing house, LCH.Clearnet.

Sources familiar with the matter were quoted by the Financial Times as saying that SGX may strike a separate deal or join hands with the London Stock Exchange Group, which is to purchase a controlling 60% shareholding.

All the three parties are engaged in discussion on the structure of the deal, according to the news agency.

In December 2012, the London Stock Exchange announced that it has agreed to buy a majority stake in LCH.Clearnet Group for €15 per share, much less than previously announced agreement of €19 a share.

The reduction in the deal, which was originally agreed for nearly €463m, comes after publication of European rules, pressuring LCH to pile up to €375m to meet the requirements.

The deal is likely to complete following approval from the UK and Dutch regulators, although the LSE-LCH deal has been approved by several regulatory and anti-competitive bodies in Europe.

Established in 2003 through the merger of London Clearing House and Clearnet in Paris, Clearnet clears cash equities for the LSE and commodities, energy, freight, repos among others.

The G20 member countries have recently decided that clearing houses will play a key role in processing over $640 trillion off-exchange derivatives.