SGX in talks on taking LCH.Clearnet stake SGX, the Singapore stock exchange, is in discussions about taking a stake in LCH.Clearnet, the transatlantic clearing house, as bourses gear up for sweeping reform of derivatives and equities markets. The Asian exchange is in talks with London-based LCH about taking a separate stake or becoming part of the deal in which the London Stock Exchange is set to take a controlling 60 per cent shareholding, said three people familiar with the situation. IN Exchanges Consolidation The three parties are discussing the structure of the deal, the people said. It would represent a second significant move by Asian bourses into the London market after Hong Kong Stock Exchange and Clearing's purchase of the London Metal Exchange last autumn. It also underlines how exchanges are eyeing opportunities brought about by an overhaul of the global derivatives market. G20 economies have mandated that more of the $640tn off-exchange derivatives market be processed through clearing houses, with trades backed by more collateral or insurance for trading. This transforms the role of the clearing houses and paves the way for growth and bigger earnings. A clearing house stands between two parties in a trade, ensuring the deal in the event of a default. Exchanges such as SGX and the LSE regard the changes as a growth opportunity by earning profits from fees charged for offsetting the risk in open-ended derivatives contracts. LCH is one of the most prized assets, as the largest clearer left that is not owned by an exchange. Its SwapClear business is used by many broker-dealers to clear interest rate swaps. SGX has bided its time since a planned purchase of ASX, its Australian rival, was blocked by regulators. It has been weighing up a move for several months but has been put off by uncertainty surrounding the incoming European capital requirements for clearing houses, said people familiar with SGX's thinking. LCH.Clearnet was unavailable for comment and the London Stock Exchange declined to comment. After the European rules were published last September, LCH estimated that it could be forced to raise up to €375m to meet the requirements. That disclosure forced a rethink of the €463m deal agreed by the LSE and LCH and the two parties subsequently negotiated a reduction of about 25 per cent . The LSE-LCH deal has passed several regulatory and anti-competitive hurdles in Europe although it awaits sign-off by UK and Dutch regulators. LCH.Clearnet has already signalled its plans to push into Asia. It has a relationship with SGX through a project being worked on with the LSE to trade each other's blue-chip stocks. LCH.Clearnet would act as clearer. LCH.Clearnet also recently applied for a clearing licence in Australia where ASX, the incumbent exchange, is the sole clearer for its equities and derivatives markets.