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Euronext swaps stake in LCH Group for larger stake in LCH SA

First Published 1st November 2017

Euronext enters into definitive agreements for derivatives clearing with LCH SA and to become a minority shareholder

Euronext has announced the signing of the renewal of its agreement with LCH SA on the continued provision of derivatives and commodities clearing services for a period of 10 years. This follows the announcement of 8 August 2017.

The new long-term agreement covers the clearing of financial and commodity derivatives for a period of 10 years. It provides continuity of clearing services for members, saving the cost and disruption associated with a migration at a time where client bandwidth is stretched due to MiFID II implementation and Brexit planning.

Euronext entered into definitive agreements to swap its current 2.3% stake in LCH Group for an 11.1% stake in LCH SA. This transaction is subject to regulatory review and is expected to close in the next few months. Euronext will recognise a net capital gain following the share swap of around €24m.

Euronext will remain on the Board of LCH SA following completion of the share swap. Euronext will also nominate one representative to LCH SA Audit Committee and will continue to be represented at LCH SA Risk Committee. A new Consultative Committee dedicated to Euronext derivatives business will be created.

Euronext will have certain minority protection rights connected with its new shareholding in LCH SA, including a pre-emption right in circumstances where LCH Group decides to sell more than 50% of the shares of LCH SA. The pre-emption right involves a right of first offer and subject to certain conditions, a matching right. In addition, LCH Group has a pre-emption right over a transfer of shares by Euronext and the ability to buy back Euronext's shares in certain circumstances where the derivatives agreement is terminated.

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