Cedel to link with Deutsche Borse

CEDEL, THE European clearing house and the clearing arm of Deutsche Borse, the German stock exchange, yesterday announced plans to merge, writes Andrew Garfield.

The move, which is aimed at providing financial institutions with a seamless pan-European facility for settling share and bond and exchange traded derivatives transactions, throws down the gauntlet to rival Euroclear, Cedel's Brussels-based rival and the world largest cross-border clearing organisation.

The deal follows the recent agreement by the main European bourse to work together to create a pan-European stock exchange trading platform.

Cedel President Andre Lussi described the deal as the first step towards a "pan-European clearing house". The merger, he said, would result in cost savings for users of around $300m out of the $800m users spend on clearing and settlement every year.

SBF, the holding company for the French stock exchange and Sicovam, the French central securities depository have agreed to join the Cedel, DB alliance shortly after it is consummated early next year subject to a valuation agreement.

Mr Lussi yesterday invited other clearing organisations in Europe to join. The invitation was mainly aimed at Euroclear, Cedel's main rival, but also at Crest, the clearing house for the London Stock Exchange.