London Stock Exchange Group’s deal to acquire a majority stake in LCH Clearnet is expected to enable millions of pounds of savings through IT efficiencies.
Following lengthy negotiations the LSE has agreed buy a controlling 57.8 percent share in clearing house LCH as it continues to diversify its business, in a deal worth £461 million.
It is expected that the deal will enable cost savings through the group by rationalising IT systems following the majority share buyout by LSE.
According to a joint statement released today, it is estimated that run-rate savings of £21 million can be achieved each year through a number of measures, including IT related procurement savings, as well as outsourcing and data centre rationalisation.
There will also be rationalisation of property and de-duplication of functions within the group.
LSE has been in discussions to acquire a majority stake in the clearing house for a number of months, and has previously indicated it will also reduce IT procurement costs as a result of the larger scale of operations brought about by a deal with LCH.
“Our partnership with LCH.Clearnet will be transformative,” LSE Group CEO Xavier Rolet said of the deal. “Together with our customers, we will promote greater innovation, choice and competition in the risk management industry, especially in listed derivatives.”
He added: “This new-style open-access clearing model, will build upon the successes we have already had with our existing equity and fixed income trading partnerships, Turquoise and MTS.”
LCH Clearnet CEO Ian Axe commented: “Together, we see significant revenue opportunities opening up as a result of both customer and regulatory demand for more efficient and more sophisticated tools to manage market risk.”
The deal will also see Nasdaq increase its share in the clearing house, which is responsible for services such as settling trading accounts and clearing trades.