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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

LSE buys minority stake in Euroclear, deepening market infrastructure role

London Stock Exchange has announced it will acquire a small stake in Europe’s largest clearing house, helping to deepen the operator’s role within the financial market infrastructure.

London Stock Exchange Group (LSEG) announced on Wednesday that it plans to acquire a 4.92% stake in Euroclear in a deal valued at £241.9 million.

Euroclear is a major financial market infrastructure company, offering settlement and clearing services across Europe and boasting €28.2 trillion in asset under custody.

‘We are delighted to become a shareholder of Euroclear, with which we have a long-standing operational and commercial relationship,’ CEO of LSEG David Schwimmer said. ‘

‘Both LSEG and Euroclear share the same open access philosophy and a customer partnership approach which is central to our businesses.’

LSEG preps for Brexit with Euroclear deal

The deal comes a little under two months until Britain leaves the EU on March 29, with Brexit, in part, serving as a catalyst behind the move as it threatens to take trading volume away from the London-based exchange.

LSEG’s minority investment is expected to strengthen LSEG and Euroclear’s existing operational and commercial relationship and provide further opportunities for the companies to deliver benefits to their customers through commercial collaboration and product development, the exchange operator said.

Following LSEG’s minority investment in Euroclear, a representative from the exchange operator is expected to join the clearing house’s board.

LSEG keeps pace with rivals

Around 18 months ago, several banks, including Royal Bank of Scotland, sold around a 10% stake in the European clearing house to US-based rival Intercontinental Exchange.

The deal will be financed using a mix of existing cash and debt, LSEG said.

‘The group’s adjusted net debt to EBITDA will remain within its target range of 1-2x following completion,’ LSEG said. ‘The transaction is expected to be earnings accretive.’

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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