Banks Take Cut in LSEG Clearing Revenue for Stake in Post-Trade Business

A group of 11 banks, existing customers of LSEG, have agreed to cede part of a surplus revenue share agreement from the group’s SwapClear business in return for a 20% stake in LSEG’s Post Trade Solutions business, which includes SwapClear.

The investing banks, Bank of America, Barclays, BNP Paribas, Citi, Deutsche Bank, HSBC, J.P. Morgan, Morgan Stanley, Nomura, Societe Generale and UBS, will each become shareholders in Post Trade Solutions, acquiring the stake for aggregate cash consideration of £170 million, valuing the whole of Post Trade Solutions at £850 million. The business generated revenue of £96 million in 2024.

LSEG will acquire an increased proportion of the revenue surplus from the SwapClear business. Previously, the founding members of SwapClear, which include the investing banks, were entitled to circa 30% of SwapClear’s revenue surplus through to 2035. As a result of this transaction, LSEG says the share for the SwapClear banks will reduce to 15% for 2025 (applied retroactively to 1 January 2025) and 10% from 2026.

LSEG states the investing banks have reaffirmed their commitment to the ongoing successful partnership in SwapClear through an extension of the revenue surplus share at the 10% level from 2035 until 2045. The amount paid in relation to the share in 2024 was €200 million. LSEG says it is paying a total cash consideration of £1.15 billion for this change in terms, payable in two instalments in 2025 and 2026. A further payment of up to a maximum of £200 million will be payable should certain future growth targets be met.

“We support LSEG’s work to advance the post-trade landscape for bilateral OTC derivatives, having seen the efficiency benefits,” says Andy Morton, head of Markets, Citi. “Ongoing innovation is vital for improving risk management, and Post Trade Solutions, backed by banks, can transform the global market.”

Troy Rohrbaugh, co-CEO, commercial & investment bank, JP Morgan, adds, “Our partnership with SwapClear has been highly successful in growing and scaling the first interest rate swaps clearing service into an established and profitable business. We see great opportunity for the many benefits associated with clearing such as risk management, standardisation and efficiencies, to be replicated by those trading uncleared derivatives.”