Failed IT project costs clearing house €47m

Clearing house LCH.Clearnet has written off €47.8m after scrapping a failed three-year project to build an integrated clearing IT platform for the company.

The Generic Clearing System (GCS) project was started after the merger of London Clearing House and Paris-based Clearnet in 2003 with the aim of developing a standard IT engine for clearing trades across different markets and products.

A review of the GCS programme last year had already written off €20.1m on part of the investment after it failed to deliver any of the benefits originally promised and LCH.Clearnet said a further review last month has now concluded any further development of the GCS system is "not economically or technically viable".

That caused a boardroom split leading to the departure of then CEO David Hardy.

LCH.Clearnet has now decided to ditch GCS completely and said it will take a further €47.8m hit on the development costs when the group's half-year financial results are published next month.

Chris Tupker, chairman of LCH.Clearnet, said the nature of the GCS design resulted in an "over-complex" solution both in terms of on-going production support, operability and development.

Roger Liddell, newly appointed CEO for the company, has now been tasked with preparing a long-term IT strategy for the group.

LCH.Clearnet operates in a number of markets including trades of equities, derivatives, interest rate swaps and bonds.