By Huw Jones
LONDON (Reuters) - Pan-European stock exchange Euronext will shift clearing of derivatives trading to its new clearing arm in Italy by the third quarter of next year, it said on Monday, to compete directly with London Stock Exchange Group and Cboe.
Euronext currently clears its derivatives transactions at LCH SA, owned by London Stock Exchange Group (LSEG), but wants to build up its own in-house clearing operation, in tune with European Union efforts to deepen the bloc's capital market after Brexit.
"Euronext confirms it expects to migrate the listed financial derivatives and commodities markets of Euronext Amsterdam, Euronext Brussels, Euronext Lisbon, Oslo Bors and Euronext Paris from LCH SA to Euronext Clearing by Q3 2024," the exchange said in a statement.
It had already announced that Italy would become the default centre for clearing its stock transactions by the end of this year. Under EU 'open access' rules, customers can continue to clear their Euronext share trades at rivals such as LCH or Cboe if they want to.
"We are very confident we will capture the bulk of our cash equities clearing," Anthony Attia, Euronext global head of primary markets and post trade, told Reuters.
Clearing equities and derivatives in one centre will build "critical mass" to allow customers to net across positions, Attia said.
Euronext, which obtained its own clearing house as part of its acquisition of Borsa Italiana in Milan, owns just over 11% of LCH SA, a stake LSEG now has an option to buy.
Attia said the stake was worth around 66.8 million euros ($72.2 million).
LSEG had no comment on whether it would buy the stake.
Separately, LSEG confirmed its agreement with Euronext on clearing financial and commodity derivatives would terminate next year but said LCH SA would remain "strategically important".
LCH SA clears the majority of the Eurozone repo market and Euro credit derivatives market in addition to many European equity market venues, LSEG said.
"We look forward to continuing to provide clearing services to our global customers, who benefit from access to our multi-asset offering," LSEG added.
($1 = 0.9249 euros)
(Reporting by Huw Jones; Editing by David Goodman and Mark Potter)