NYSE Liffe puts London derivatives ambitions on ICE
ICE Clear Europe will now handle NYSE Liffe’s London derivatives
ICE Clear Europe is to begin clearing for NYSE Liffe’s London derivatives market on 1 July, marking the end of NYSE’s migration from LCH Clearnet, and the beginning of NYSE Euronext’s integration with ICE, which bought the exchange in December for $8.2 billion.
Previously, NYSE had planned to set up a full-service derivatives CCP in London, with Demetria O’ Sullivan brought in from Citigroup in December as chief risk officer for the project. However, later the same month NYSE agreed in the light of its acquisition by ICE that ICE Clearing Europe would become the new CCP for NYSE Liffe in London.
The functions taken over by ICE Clear Europe will include settlement for equity and bond contracts, collateral management and margin calls, risk management and handling defaults.
Daily position management will still be handled by NYSE Liffe’s universal clearing platform. In addition, grading and delivery management for NYSE Liffe’s commodities contracts – cocoa, coffee, feed wheet and white sugar – will remain with NYSE Liffe’s guardian platform, which will be extended to support allocation of deliverable bonds.
A NYSE Spokesperson explained that the firm had originally investigated bringing its entire clearing operation in-house, but until now some functions were still being carried out by LCH Clearnet. However, making ICE Clear the CCP for NYSE Liffe derivatives trading in London ends that situation.
“NYSE Liffe thanks customers for the support they have shown in preparing for this clearing migration,” said Mark Ibbotson, co-chief executive of NYSE Liffe. “We are pleased to work with ICE Clear Europe as our clearing provider, given their strong track record for security and product innovation.”
ICE Clear Europe is a subsidiary of US-based IntercontinentalExchange. The company was established in 2008 as the first new clearing house in the UK for over a century, and claims to have taken over $16.5 billion initial margin and 26 million energy contracts from LCH Clearnet when it launched in July 2009.
