UPDATE 1-French regulators watching NYSE Euronext clearing move

Wed May 12, 2010 10:34am EDT

* NYSE Euronext clearing tie with LCH Clearnet to end in 2012 * NYSE Euronext to set up own clearing houses in London, Paris * French regulators want smooth transition, watching credit derivatives clearing

(adds details, adds regulators statement)

PARIS, May 12 (Reuters) - French financial regulators said on Wednesday they will closely monitor the change in clearing system announced by NYSE Euronext NYX.N NYX.PA, saying clearing houses played a "crucial role" in financial stability.

Earlier in the day, NYSE Euronext said it would stop using the services of the LCH Clearnet group from 2012 and would start its own clearing houses for European securities and derivatives in London and Paris in late 2012.

"LCH.Clearnet Ltd in London and LCH.Clearnet SA in Paris have been informed that NYSE Euronext's current contractual arrangements for clearing with them will terminate accordingly at that time," the NYSE Euronext statement said.

No termination fees or penalties will be payable.

The new clearing house in London will clear listed interest rate, commodities and forex products and the new clearing house in Paris will clear equities and equities derivatives.

In a joint statement, French stock market watchdog AMF, the Bank of France and Authorite de Controle Prudentiel (ACP) urged NYSE Euronext and LCH Clearnet to ensure a smooth transition.

They said they would be particularly vigilant on credit derivatives clearing, in line with targets provided by the G20 and European Union finance ministers council.

(Reporting by Dominique Vidalon, editing by Marcel Michelson)

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