The London Stock Exchange has tightened its grip on derivatives clearing in a sign of growing confidence that the threat of losing chunks of business to European Union rivals after Brexit was receding.
It marked the first major move by the exchange's new chief executive David Schwimmer, the former Goldman Sachs banker who took the reins in August.
Mr Schwimmer said the LSE was spending €438m on increasing its stake in LCH by 15.1% to over 80%.
The transaction, which will be funded from cash and existing debt facilities, will add to earnings per share following completion, expected before the end of 2018, LSE said.
"This reflects our confidence in LCH for continued growth," the exchange's chief financial officer, David Warren said.
LCH is one of the world's top clearing houses for derivatives, but its dominance in euro denominated transactions has led to calls for that activity to be relocated to the single currency area after Brexit.
LCH also faces the threat of being locked out of the EU market when Britain leaves the bloc next March if a no-deal Brexit puts the legality of cross-border derivatives contracts into question.
Warren, however, said he was encouraged by recent meetings with regulators and central bankers who are looking at potential disruption to so-called contract continuity.
"We think there is a new urgency about getting solutions and legal certainty in the very near future, and it's very clear our customers want continuity of service," he said.
A working group lead by the European Central Bank and Bank of England on market risks from Brexit is due to report its initial findings in coming days.
The LSE has a clearing unit in Paris, but Warren said customers do not want the exchange to apply for a licence there to handle the euro clearing currently being done in London.
LCH would need to serve notice on EU customers by December if it felt it could not continue clearing their transactions in London after Brexit, but exchange officials said they have no plans to do this in a further sign that the threat of disruption has receded.
Rival Deutsche Boerse in Frankfurt is stepping up efforts to attract LCH business from London but volume so far is small.
Warren played down the threat, saying euro-denominated business transacted by EU customers accounted for just 7-14% of LCH overall activity.
Nevertheless, the LSE, which also owns the Milan Exchange, has applied for a licence in Amsterdam to operate its Turquoise pan-European share trading service.
The LSE said that total income from continuing operations rose 8% to £522m in the quarter ended September 30, below analysts' estimates of £530m.
Warren said an accounting rule change dampened revenue and income figures in the exchange's capital markets unit.
