UPDATE 1-LSE sees acquisition of LCH.Clearnet within Q1 -report

Mon Dec 17, 2012 8:49am EST

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MILAN Dec 17 (Reuters) - The London Stock Exchange expects to finalise its acquisition of clearing house LCH.Clearnet within the first quarter of next year, LSE Chief Executive Xavier Rolet told Italian daily Il Sole 24 Ore on Sunday.

Britain's competition watchdog on Friday gave a green light to the London Stock Exchange Group Plc's planned purchase of LCH.Clearnet.

But both parties are back in talks over terms to reflect higher capital requirements being imposed on exchanges by European regulators overhauling the financial system after the banking crisis.

"Capital shortfall for LCH is said to be around 300-375 million euros and it could be even higher, this is why we are in talks to change the terms of the deal," said Rolet, adding he expected the deal would be done "into Q1". He said that still depended on a green light from European regulators.

"We have already put aside the majority of funds we will need," he said.

A spokesperson for the LSE welcomed the go ahead from Britain's competition watchdog, but declined further comment.

Under the deal terms agreed in April, the LSE would buy up to 60 percent of the clearing house for 19 euros per share.

However it would also have to pay 60 percent of the capital increase imposed by the European Securities and Markets Authority (ESMA) to LCH.Clearnet. The ESMA may not finalise its demands until early next year.

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