Reports that the London Stock Exchange (LSE) is considering withdrawing its business from the London...
Reports that the London Stock Exchange (LSE) is considering withdrawing its business from the London Clearing House in the wake of the merger between LCH and Clearnet should be seen in a positive light by investors and the providers they rely on, according to APCIMS.
The association, which represents private client investment managers and stockbrokers across Europe, is following the various proposals affecting stock market clearing and settlement closely on behalf of its members who are concerned about their own business costs.
"The LSE's concerns regarding the merger are not just foot-stamping," the association says.
"The exchange is looking to fix its costs, and the news it is considering moving its business shows that it is shopping around."
Although APCIMS does not say it directly, the inference is that cost savings by the stock market operator can be passed onto its members, in turn enabling cheaper share dealing for investors.
The LSE is reportedly looking at other clearing solutions because of fears that the LCH-Clearnet platform will squeeze it for too much money.
Clearnet is owned by LSE competitor Euronext – the amalgam of the Paris, Brussels and Amsterdam exchanges – which is battling both London and Frankfurt for European supremacy to match that of New York.
One alternative is to switch the LSE's clearing business to Eurex Clearing, owned by German stock exchange operator Deutsche Borse.
APCIMS says while the clearing battle is important, what is more important for its members is whether Europe can benefit from a better combination of both clearing and settlement of deals.
Inefficiencies between the clearing and the settlement sides of dealing are seen as keeping costs unnecessarily high, and are considered a major reason why – apart from economies of scale - share dealing is more expensive in Europe (including the UK) than the US.
Three years ago, CREST, the computerised settlement system used by LSE members, crashed on the last day of the fiscal year 1999-2000, creating huge problems for UK investors trying to manage losses for tax purposes.
Since then CREST has merged with Euroclear to create the biggest European settlement system - the two organisations settled trades worth more than £140trn in 2001.
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