Investment Operations

Clearstream and LCH EquityClear Collaborate on New Post-trade Connection

Derivatives Trade Lifecycle Training
  • LCH Ltd-cleared equities contracts to be eligible for settlement via Clearstream
  • Global depository receipts and exchange-traded products in scope

Clearstream Banking S.A. and LCH Ltd have agreed to make LCH-cleared equities contracts eligible for settlement within Clearstream Banking S.A.

As part of the new connection, all global depository receipts listed on London Stock Exchange’s International Order Book (including Asia-Pacific global depository receipts) as well as the full suite of internationally settled exchange-traded products (ETPs), such as exchange-traded funds (ETFs), exchange-traded notes (ETNs) and exchange-traded commodities (ETCs) which are listed on the exchange’s ETP trading service, are expected to be available for settlement through Clearstream in the third quarter of 2020.

The connection represents a milestone for the ICSD, according to Thilo Derenbach, Head of European Custody Product at Clearstream. “This provides yet another building block for European investors in their efforts to consolidating their entire trade flows, CCP-cleared or not, within Clearstream,” he said.

Global depository receipts have been increasingly popular, say industry watchers, with an average daily trading turnover of USD 570 million on London Stock Exchange’s International Order Book during Q1 2020. ETPs have also been continuously in demand, as investors in these products benefit from high diversification and liquidity as well as low cost.

The LCH touted the relationship as an example of their open access philosophy, which, according to Alex Krunic, Head of Equities at LCH, enables them “to work with a number of different trading platforms and settlement venues to help drive efficiencies for the market as a whole.”