SGX 'eyeing stake in transatlantic clearing house'

PHOTO: SGX 'eyeing stake in transatlantic clearing house'

SINGAPORE Exchange (SGX), Asia's second-largest bourse operator by market capitalisation, is in talks to buy a stake in transatlantic clearing house LCH.

Clearnet, betting on an increase in trading volumes for derivatives, the Financial Times reported on Monday.

SGX may participate in the London Stock Exchange (LSE) Group's bid for a 60 per cent holding in LCH or buy a separate stake, the Financial Times said, citing three people familiar with the situation.

The three parties are discussing the structure of the deal, the daily added. The LSE last month agreed to pay 366 million euros (S$612 million) for a majority stake in LCH.

"As the Asian gateway, SGX is open to partnerships and alliances for the benefit of shareholders, the company and our customers. However, we do not comment on media reports or speculation," SGX spokesman Carolyn Lim said in an e-mailed statement.

Clearing houses sit between trading firms and ensure trades in securities such as stocks, bonds and derivatives are completed, holding cash to refund firms left out of pocket by a counterparty default.

Exchanges are trying to expand into central clearing, following a regulatory overhaul of the over-the-counter derivatives market by the Group of 20 leading economies.

Regulators want trades in derivatives, such as interest-rate swaps, to be put through a clearing house in order to reduce the level of systemic risk posed by the market and make it more transparent.

SGX already has its own clearing service, AsiaClear, which handles trades in commodities and financial derivatives, including interest-rate swaps and foreign-exchange forwards.

LSE won approval from Britain's competition watchdog in December for its planned acquisition of LCH.