The London Stock Exchange Group (LSE) snapped up a 4.9% stake in the Belgian-based settlement house Euroclear for €278.5 million in a move linked to its post-Brexit strategy.
Belgium’s Euroclear has more than €28.2 trillion assets in its possession. The LSE’s offer will allow the platform to tighten its grip on the euro-derivatives clearing market after Brexit.
In the wake of Britain’s vote to leave the European Union, speculation abounds as to how the London Stock Exchange will retain its position in the euro-clearing market where it is a market leader.
The first move by the exchange occurred in October 2018 when it increased its stake in the LCH, a British clearinghouse that serves major international exchanges, to 80%. The LCH virtually dominates euro-denominated clearing transactions and there are calls for the platform’s relocation to the single currency area after Britain exits the European Union.
Settlement houses hold highly liquid assets like top-rated government bonds or cash for investors to use for securities and derivatives trading. The London Stock Exchange will pay for the stake using existing cash and debt rather than borrowing or equity.
The London Stock Exchange’s move is also a response to a wider financial consolidation trend in Europe. The US-based Nasdaq has made an offer for Oslo Børs worth approximately €670 million. Nasdaq already owns the Danish, Swedish, and Finnish exchanges.
Oslo is also eyed by the Franco-Dutch Euronext, the London Stock Exchange’s main competitor, whose current offer stands at €618 million.