Automated clearing of derivatives has been a huge issue even before Dodd-Frank was passed into law. For the longest time, it has seemed that mandated clearing of derivatives--and perhaps even mandated exchange-based trading--was fait accompli.This raised the profile of the likes of the Intercontinental Exchange, CME Group, Eurex and others.

The spotlight more recently has fallen on LCH.Clearnet, a London clearing and settling firm that has the distinction of being the object of three big name suitors, NYSE Euronext, Nasdaq OMX and the London Stock Exchange. LCH.Clearnet is attractive in large part because it operates a clearing service for OTC interest rate swaps called SwapClear, which recently pushed into the United States to compete with CME Group, notes the Financial Times. Interest rate swaps are perhaps the largest part of the OTC derivatives market, dwarfing the CDS market, which has generated more media coverage.

Dodd-Frank has ignited a race to set up SEFs and large clearing mechanisms, which loom as big revenue generators. Perhaps it was only a matter of time before the big boys in the exchange industry turned their full attention to LCH.Clearnet, which has yet to respond to any of the offers. The stakes may be highest for the LSE, as it does not currently own a clearing mechanism. But the fact that NYSE Euronext has teamed with Markit to make an offer--even as it works to consummate a deal with Deutsche Bourse--says a lot about the strategic value of LCH.Clearnet.

For more:
- here's the article