JP Morgan Cazenove has been appointed to oversee the sale of London Stock Exchange’s Paris-based clearing business LCH SA for up to €500m, a deal crucial to the success of the company’s merger with Deutsche Boerse.
City A.M. understands that the bank will be seeking to drum-up competition for LCH SA, with pan-European exchange Euronext thought to be the early frontrunner.
New York Stock Exchange-owner Intercontinental Exchange, CME Group and Nasdaq are considered to be among the suitable US candidates. The shortlist is also likely to be drawn from an international pool of companies including the Hong Kong stock exchange, the Singapore Exchange, Shanghai Stock Exchange and Moscow Exchange. Smaller European players such as Icap, Bolsa de Madrid, SIX Swiss Exchange and Euroclear are also considered possible suitors.
Euronext, which owns the main stock exchanges in France, Netherlands, Portugal and Belgium, is believed to be in pole position because it contributes around half of the revenue of LCH, which has been valued at up to €500m.
The sale of the French arm of LCH is part of the London Stock Exchange’s efforts to ensure Brussels regulators approve its £21bn merger with Deutsche Boerse, and any sale would be dependent on that deal completing.
The London Stock Exchange, Deutsche Boerse, Euronext and JP Morgan declined to comment.
The potential sale puts Euronext in a difficult position. While it has an interest in LCH SA, the company is strongly opposed to the London Stock Exchange-Deutsche Boerse tie-up.
Euronext’s chief executive has said the ground-breaking exchange deal would create a “virtual monopoly”. And the governments of France, Netherlands, Belgium and Portugal - all countries in which Euronext owns the main stock exchange - have publicly voiced opposition to the merger and written to Brussels regulator the European Commission.
The European Commission announced on Friday last week that the deadline for its probe into the mega-merger was being pushed back from 13 February to 6 March, at the request of the companies.
The London Stock Exchange said it was willing to explore the sale of LCH SA, the French arm of LCH Group, after the European Commission announced the launch of an in-depth, phase two investigation into its Deutsche Boerse merger at the end of September. The company said this was to “address proactively anti-trust concerns” raised by the Brussels regulator.