The NYSE Euronext (NYSE news) is aiming to beef up its clearing services at a time when new financial rules are promoting such services as a way to impose order on various derivatives markets. Recall the exchange has terminated its contract with LCH. Clearnet in Europe and will set up two clearing centers in Europe. The new unit in Paris will clear equities and over-the-counter equity derivatives; the one in London will clear fixed income, foreign exchange and commodities.

It has said it will invest $60 million to establish the two clearing houses and from 2013 onwards, it expects to earn $100 million annually in additional revenue. This sets up a larger competition with other exchanges that also clear trades as well as execute trades. Financial News suggests that NYSE Euronext is girding for a knock-down-drag-out war with the CME in the futures market. CME owns 98 percent of the U.S. market and has "responded with studied indifference," notes the article.

Via its NYSE Liffe unit, NYSE Euronext thinks it has a secret weapon: a combined cash clearing and derivatives clearing technology that would not only allow enhanced risk management controls but also lower costs through cross-margining. It is an interesting approach. Given the CME's dominance in futures, there will be plenty of people hoping the NYSE can at least inject some competition into the market. 

For more:
- here's the Financial News article

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