LSE LAUNCHES CENTRAL COUNTERPARTY FOR INTERNATIONAL ORDER BOOK

Posted March 31, 2009

LONDON – The London Stock Exchange (LSE) has launched a new central counterparty (CCP) service for trading on its International Order Book (IOB) of the 50 most liquid depositary receipts covering securities from Russia, Kazakhstan, South Korea and India.

“The IOB has been one of our major success stories of recent years, and as the world’s only truly liquid on-exchange order book for depositary receipts offers great advantages for our many international issuers,” says Martin Graham, Director of Equity Markets at the LSE Group. “The introduction of a clearing service is a very important stage in the evolution of the IOB, and comes at a time when the market is ever more focused on eliminating counterparty risk and enhancing operational efficiencies. The service is already attracting new participants to the IOB, and will drive liquidity for the benefit of investors and issuers alike.”

X-TRM, the London Stock Exchange Group’s post-trade router, will be used in the UK market for the first time as part of the service, increasing operational efficiency by ensuring that trades are routed from the IOB to the CCP service provider LCH.Clearnet without manual intervention. LCH.Clearnet will also offer firms the option of netting transactions in the same securities on the same day, in order to reduce transaction management costs and the firm’s financial exposure at settlement level.

“The launch of clearing for the IOB will also bring wider benefits,” adds Graham. “It will increase the attractiveness of the EDX London IOB derivatives service, and through the use of the X-TRM post-trade router, is a first step in using the Group’s post-trade assets to help shape the creation of a wider European trading network linked by shared technology platforms and processes.”

The IOB offers specialist investors access to international markets via depositary receipts from 46 countries.