Euronext Italian arm to become group-wide clearer from end 2023

By Huw Jones

LONDON (Reuters) - Pan-European stock exchange Euronext said on Thursday that customers will be able to clear all share trades at its Italian arm from the end of 2023, a move that ends reliance on a London Stock Exchange Group (LSEG) unit in Paris.

Euronext, which operates exchanges in Paris, Amsterdam, Brussels, Dublin, Lisbon, Milan and Oslo, has long relied on LCH SA in the French capital for clearing its stock and derivatives trades, but its acquisition of the Milan Exchange last year from LSEG included an in-house clearer.

"This is the first milestone in the transformation of Euronext Clearing to create the Euronext clearing house of choice for its cash equity markets," Euronext said in a third quarter trading statement.

Clearing in derivatives traded on Euronext will follow in 2024.

Customers could continue using LCH SA, in which Euronext has an 11.1% stake, for clearing share trades, but will have to shift all credit derivatives to Italy.

As many are likely to shift stock and derivatives trading to Italy given efficiencies from using one location.

LSEG said LCH SA would remain a key hub.

"LCH SA is strategically important to LCH Group and LSEG, clearing the majority of the euro zone repo market and the majority of the euro credit derivatives market, in addition to many European equity market venues, including Euronext, Turquoise, CBOE and Aquis," an LSEG spokesperson said.

Clearing has become a politicised issue in the European Union following Brexit as the bloc seeks to end heavy reliance on LCH's London operation for clearing interest rate swaps, setting an end-June 2025 deadline for cutting off access to EU customers.

"In December we will come forward with measures to make the European Union a more competitive and attractive clearing landscape by fostering the demand for and supply of derivatives products at EU central counterparties (CCPs) and by strengthening the EU supervisory framework for those CCPs," EU financial services commissioner Mairead McGuinness said on Thursday.

Earlier this week, Deutsche Boerse's Eurex Clearing offered payments to buy-side customers who relocate derivatives clearing from London in 2023 in anticipation of the EU legislation.

(This story has been corrected to remove reference to credit in paragraph 4)

(Reporting by Huw Jones; Editing by Mark Potter and Susan Fenton)