PARIS (dpa-AFX) - Euronext (ENXB.BE, ENX.BR, ENX.AS, ENX.PA) said that it has signed a binding heads of terms with ICE Clear Netherlands, a subsidiary of Intercontinental Exchange (ICE) for the provision of clearing services for its financial derivatives and commodities markets.
Under its 'Agility for Growth' strategy, Euronext has deployed significant effort to establish clearing optionality for its clients, including acquiring a 20% stake in EuroCCP and subsequently launching the preferred clearing model for cash equities.
On 3 January 2017, Euronext said that it had been granted exclusivity to acquire 100% of the share capital and voting rights of LCH.Clearnet SA , contingent on the closing of the merger between Deutsche Börse AG and LSE Group. Euronext has communicated to the management and the Board of Directors of both LSE Group and LCH Group that the transaction remains a strategic priority of Euronext and that Euronext will remain a willing buyer of Clearnet, irrespective of the outcome of the merger between LSEG and DBAG, under the terms agreed.
Considering the European Commission's prohibition of the merger between Deutsche Börse AG and LSE Group and the refusal of LSE Group and LCH Group to engage in discussions about completing the agreed sale of Clearnet, Euronext is now obliged to ensure its clients obtain the best, most cost effective and competitive clearing solutions beyond 31st December 2018, at which time the current clearing services agreement with Clearnet will expire.
The agreement with ICE Clear Netherlands covers the clearing of financial derivatives and commodity derivatives for a period of 10 years with ICE Clear Netherlands. Euronext will contribute a €10m upfront investment in ICE Clear Netherlands. Clearing operations will be run from Amsterdam and a new and innovative solution for asset financing, inventory management and physical delivery for commodities will be built by Euronext and operated from Paris.
In addition the agreement provides for a continued income stream for Euronext, with EBITDA levels that should be comparable to fiscal year 2016.
Euronext noted that it will appoint one representative to ICE Clear Netherlands risk committee and will chair a product committee dedicated to Euronext's clearing service.
The formal clearing services agreement is expected to be completed during the second-quarter of 2017.
In order to ensure a seamless migration of Euronext derivative markets to the new clearing house during H2 2018, Euronext and ICE Clear Netherlands will immediately engage in a joint client consultation.
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