The agreement covers the clearing of financial derivatives and commodity derivatives for the next 10 years. The groups said this would provide continuity and avoid the costs and disruption of migrating to a different platform "at a time where client bandwidth is stretched due to MiFID2 implementation and Brexit planning".
Euronext and LCH SA will work together to develop new products for the benefit of clearing members and market participants, and to focus on providing a lower cost service for members.
They also plan to cut clearing fees to 15 per cent from January 2019, depending on each specific product and service, to help "improve the competitive landscape and encourage increased trading volumes".
Stéphane Boujnah, chief executive and chairman of Euronext, said:“This agreement is a long-term and sustainable solution for the clearing of our derivative markets. It also provides Euronext with a sizeable ownership position in a leading multi-asset CCP based in the Eurozone with strong positions in the fast growing fixed income and CDS businesses. Our clients will benefit from a reduction in clearing fees and the continuity of service avoids the cost and disruption associated with a migration.”
As part of the deal, Euronext will swap its current 2.3 per cent stake in LCH Group for an 11.1 per cent stake in LCH SA, which has "substantial growth opportunities in the fixed income and CDS businesses".
"This transaction will strengthen the long-standing relationship between Euronext and LCH SA, and cement the strategic future of LCH SA", Euronext said.