ER Rolet, chief executive of the London Stock Exchange (LSE), has sensationally quit his position on the board of LCH.Clearnet, sparking rumours his firm is about to launch a rival clearing business.
Rolet told LCH.Clearnet he was “too busy” to remain on the board. However a conflict of interests would arise if the LSE was considering launching its own clearing house.
Rolet failed to nominate a successor, effectively severing the firm’s ties to the LCH.Clearnet board. The LSE remains a customer with the firm but is understood to be considering the future of the relationship.
‘Analyst Joshua Raymond of City Index told City A.M.: “Some are inevitably going to read between the lines and think that this could be a trigger for the LSE to find another clearing provider or indeed build its own, a move that would prove very difficult if its chief executive remained a board member of LCH.Clearnet.
Raymond added: “Others may simply believe that Rolet had reached the end of his tether with what is perceived to be very slow decision making at board level. It could well be a combination of both of these factors.”
A spokesman for LCH.Clearnet confirmed Rolet had left the board, citing clashes in his schedule. The LSE and Rolet declined to comment.
The 16 directors of the LCH.Clearnet board declined to comment or could not be reached last night.
A source close to the LSE said: “They have signalled they will look at this area. It won’t be tomorrow but they are reviewing this part of their business. Post trade has become an increasingly important part of trading, particularly as a result of falling trade sizes, making it more expensive.
Sources close to LCH.Clearnet played down the significance of the resignation and questioned whether the LSE would be able to compete with the firm’s clearing business.
LCH.Clearnet, which is 83 per cent owned by the firms who use its services, is not a profit maximising firm, partially existing to facilitate its owners, meaning it would be difficult for the LSE to compete on a level playing field.