Euronext is in talks to buy the French clearing arm of the London Stock Exchange, a move which potentially eases competition concerns from regulators over the LSE's tie-up with Deutsche Borse.

A joint statement both sets of exchanges confirmed on Tuesday that talks had taken place with Euronext to offload LCH SA (Clearnet), the Paris-based clearing subsidiary.

Euronext confirmed separately it was in exclusive talks to acquire the business, adding that there is no certainty the discussions will lead to a deal. 

The unit is part of the LSE’s wider LCH clearing operation and acts as a central counterparty (CCP), clearing derivatives with French banks, such as BNP Paribas and SocGen.

Both exchanges said in late September they are prepared to sell French clearing house.

Such a sale could soothe concerns from European competition watchdogs, currently investigating the Deutsche Borse/LSE tie-up which would create a powerhouse of stock and bond trading and post-trade services.

Regulators are understood to want more customer choice in the clearing of financial derivatives - an area which a combined LSE and Deutsche Borse entity would dominate if a merger went ahead.

There are also fears that a reduction of competition in clearing is a potential source of risk systemic risk given the essential role clearing houses now play post-financial crisis.

“Any potential sale of LCH.Clearnet SA would be subject to the review and approval by the European Commission,” Deutsche Borse officials wrote in a statement on Tuesday.

LSE added: “There can be no certainty that this will lead to any transaction or as to the terms upon which any transaction might proceed.”

Euronext, which operates exchanges in Paris, Brussels, Portugal and the Netherlands, has already made plans to boost its market share in clearing and settlement.

Earlier this year the firm acquired a 20% stake in EuroCCP, the leading CCP for pan-European equity markets, for €14m.