UBS switch their LSE clearing to X-Clear Wednesday, December 03, 2008
Image via WikipediaIt wasn't a huge surprise to see that UBS was going to switch its' clearing for its' London Stock Exchange ["LSE"] traded equity business to the Swiss based X-Clear from LCH.Clearnet. After all,
- they are both Swiss and you should never under-estimate the power of relationships e.g. inevitably, UBS personnel will be on advisory boards at X-Clear and will be one of the largest X-Clear users in Switzerland
- they will probably enjoy margin netting benefits by combining their their Swiss and UK equity business at a single clearer, which will be financially beneficially
- they may enjoy cheaper tariffs or better margin rates
However, I chuckled when reading the comment made by Robert Barnes, managing director, equities at UBS who said "that by deciding to switch to X-Clear, UBS believed that it would help accelerate a “market-driven” solution to interoperability, rather than waiting for regulators to apply further pressure to get the process moving."
Firstly, it was the LSE's decision to enable competition that allowed this to happen, albeit evidence of client support for this must have existed. Secondly, UBS are doing this for financial reasons rather than on altruisic grounds for the "good of the market". Perhaps UBS should now be using its' market clout to insist that other markets, including Switzerland and Germany, follow suit.