London Stock Exchange Group Plc, the operator of Europe’s oldest independent bourse, plans to open a central securities depositary in Luxembourg, competing with Deutsche Boerse AG’s Clearstream service and Euroclear.
The CSD will build on the infrastructure of LSE’s Italian facility and is expected to be ready by the first half of 2014, LSE said in an e-mailed statement today. The location was chosen “as a result of customer demand” and JPMorgan Chase & Co. plans to be among the first clients, the exchange said.
Central securities depositories hold stock, enable transactions to be processed and may offer settlement and custody services. Regulators globally are pushing more trades through clearing, requiring investors and traders to post more collateral to back them.
The depositary “will provide a broad range of custody and settlement services,” Raffaele Jerusalmi, chief executive officer of Borsa Italiana and director of capital markets at LSE, said in the statement. LSE will “provide a full range of post-trade services to meet the evolving needs of our customers arising from on-going financial regulatory change and the continued focus on operational efficiency.”
New European Union rules mandate central counterparties to hold collateral that’s posted as margin or in a default fund at a securities settlement system.