Euronext NV signed an agreement with ICE Clear Netherlands, a unit of U.S.-based Intercontinental Exchange Inc., for the provision of clearing services for Euronext's financial derivatives and commodities markets.
The agreement covers a period of 10 years, with Euronext making an upfront €10 million investment in ICE Clear Netherlands.
Clearing operations will be based in Amsterdam, while a new solution for asset financing, inventory management and physical delivery for commodities to be built by Euronext will be run from Paris. As part of the agreement, Euronext will appoint one representative to ICE Clear Netherlands' risk committee and will chair a product committee dedicated to Euronext's clearing service.
A formal clearing services agreement is expected to be completed in the second quarter, subject to regulatory approval. The migration to ICE Clear Netherlands is expected to take place in the second half of 2018, before its existing deal with London Stock Exchange Group Plc's LCH SA expires at the end of 2018.
As for its cash equity markets, Euronext launched a preferred clearing service to enable customers to choose between LCH's CCP and EuroCCP, in which it acquired a 20% stake in 2016. Euronext and ICE Clear Netherlands will engage in a joint client consultation to ensure the seamless transfer of Euronext's derivative markets to the new clearing house.
The agreement comes as Euronext's €510 million takeover of LCH was canceled after the European Commission blocked the planned merger of LSE and Deutsche Börse AG due to competition concerns.
LSE, meanwhile, said Euronext's 2016 contribution from derivatives clearing to LCH was "immaterial" at 8% of LCH's adjusted operating profit and under 1% of LSE's adjusted operating profit.