Clearing and settlement is vital but dull stuff - indeed, practitioners often refer to it as “the plumbing”. It is also fiendishly complicated and never more so than in the proposed merger between the Depository Trust and Clearing Corporation (DTCC), which serves Wall Street, and LCH.Clearnet.

The aim is to create in three years a not-for-profit business owned by the users that will be the biggest such on the planet and keen to offer its services elsewhere. For London, this merely restores the status quo before 2003, when the old London Clearing House was not run for profit.

Under the terms of the deal, the 60-odd owners of LCH will get an as yet unspecified but higher dividend next spring, some of which will reward them for selling out, and shares in the merged business that will eventually give them about a third of this. The whole package is estimated to value LCH at up to €739 million (£587 million). This will be funded out of LCH's own revenues in what is being termed an “assisted earn-out”.

The consequence should be cheaper clearing in London. Fees charged by DTCC, which operates just such a co-operative model on Wall Street, are claimed to be a sixth of those paid here. The clear implication is that London could fall to this level, or even further, given the efficiencies that should be available from the merger.

It hardly augurs well for the London Stock Exchange's attempt to bring in X-Clear, the Swiss clearer, to compete with LCH, and the LSE was, indeed, conspicuously silent on the tie-up yesterday.

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