Ian Axe, the LCH.Clearnet chief executive is to step down, and the new owners the London Stock Exchange (LSE) has announced it is looking for a replacement to lead the London-based clearing house, with the head of its over-the-counter (OTC) swaps clearing unit, Michael Davie, a likely candidate.
LCH.Clearnet is increasingly expanding its global operations as part of the LSE’s international ambitions, and the change at the top is part of this on-going drive under the new LSE ownership. The exchange announced earlier this week it is to open its own eurozone central securities depository (CSD) as another reaction to the changing regulatory and business environment on the global financial markets.
The news of Ian Axe’s departure was revealed during the LSE’s Q1 trading statement which showed sales up by a third and confirmed the purchase of LCH.Clearnet.
Axe joined LCH.Clearnet two-and-a-half years ago, having previously worked at Barclays. “With the post transaction programme between the businesses well underway, I now feel that I can think about new opportunities,” he told the ‘FT’.
The increase in the LSE’s stake in LCH.Clearnet to a majority position earlier this year is obviously intended to take advantage of the incoming regulations demanding OTC derivative trades be processed via clearing houses in accordance with the wishes of the Pittsburgh G20 and subsequent Dodd Frank and European Market Infrastructure Regulation (EMIR) stipulations. This will lead to increasing volumes and profits at central counterparty (CCP) clearinghouses.
Clearing houses, as risk managers, stand between two parties in hedging risk mitigation or profit-seeking speculative trades and guarantee a deal is completed even if one side defaults, which is why the G20 were keen to see them move into a central position, alongside central repositories and other post-crash regulatory changes.