The London Clearing House (LCH) is to provide an anonymous clearing service for bargains executed via the London Stock Exchange's electronic trading system, Sets. Under the arrangement, member firms hedging cash deals through futures and options on Liffe will eventually be able to net-off their positions down to a single exposure.

The deal will lead to substantial cost savings for investment banks active on both exchanges. The initiative will add substance to persistent reports that the City of London establishment would like to see a more permanent link-up between the two markets. But senior officials from Liffe and the LCH reiterated last week that the two institutions would continue to pursue independent strategies.