LCH.Clearnet, working with Chi-X Europe, will launch a contract-for-difference clearing service. Investors will be able to use central clearing for European equity CFDs; a market that, in 2007 accounted for 30% of all UK equity transactions according to the FSA.

It is anticipated that the service will be launched in the third quarter of 2010, subject to regulatory approval.  It will initially cover UK blue chip equities and will be extended to further European markets shortly after launch.

To access the service, participants will execute their equity hedge, as now, with the broker sourcing the best price in the market. The broker will then register the equity hedge and associated equity CFD with Chi-X Europe's Chi-Clear CFD service, which automatically routes the CFD vs equity trade through to LCH.Clearnet's EquityClear CFD service.  All combined trades will require offset allocation to LCH.Clearnet nominated finance firms.

This should enable standardisation of contracts, processes and rules for users. The centrally cleared CFD instrument will trade with all the standard CFD benefits, including the ability to long or short a position, leverage, infinite duration, stamp exemption and reduced settlement costs.