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* Chi-X Europe to offer EMCF, EuroCCP, LCH and X-Clear next year

* Choice will cut clearing costs - Chi-X Europe CEO Alasdair Haynes

By Luke Jeffs

LONDON, Aug 16 (Reuters) - Chi-X Europe has become the latest European trading venue to offer clients a choice of clearing provider, in a move the region's top investment banks hope will dramatically cut the cost of trading European shares.

Chi-X Europe, the largest pan-European equities market, said on Tuesday it will allow clients to choose between current provider EMCF, and EuroCCP, LCH.Clearnet and SIX X-Clear from Jan. 1 via a model known as interoperability.

"Full four-way interoperability has always been one of our key goals and this will further improve efficiencies in pan-European equities trading," chief executive Alasdair Haynes said.

Clearing houses sit between trading firms and their partners, holding cash which the clearers use to refund any parties left out of pocket by a counterparty default, as was the case when Lehman Brothers collapsed in 2008.

Europe's trading venues have until recently had exclusive relationships with clearing houses, angering clients who have long complained there was no competitive pressure on the clearers to cap fees.

But last month platforms Bats Europe, which aims to buy Chi-X Europe subject to regulatory approval, and UBS MTF, a system owned by the Swiss bank, became the first to support multiple clearers through interoperability.

Interoperability enables trading firms to move business from one clearing house to another seamlessly and consolidate their flow with one clearer, effectively pitching the various providers into direct competition for the first time.

UBS offered a choice between EuroCCP and X-Clear while Bats supported "preferred" interoperability -- a compromise where its main clearer EMCF remains the default provider and only EuroCCP, LCH and X-Clear compete head-to-head.

But Chi-X Europe plans to offer next year "true" interoperability between the four clearers, including EMCF, in a coup for Chi-X that is likely to set a precedent for rivals as they develop their clearing plans.

Traders welcomed the Chi-X news, saying that clearing fees account for as much as a third of the total cost of doing business in Europe, and interoperability could cut this in half, saving large trading houses tens of millions of euros a year.

"We believe competition and choice will drive down clearing costs and make the European market an even more attractive place to trade," said Haynes.

The commitments by Chi-X Europe, Bats Europe and UBS MTF throw down the gauntlet to Europe's largest exchanges -- the London Stock Exchange , Deutsche Boerse (DB1Gn.DE) and NYSE Euronext -- which have not detailed their interoperability plans.

Chi-X Europe, which is owned by its clients, is the largest pan-European trading platform, with a European market share of 16 percent compared with the LSE's Turquoise, which has 6.2 percent, and Bats' 5.1 percent, Thomson Reuters data shows.

The U.K.'s Office of Fair Trading referred the planned takeover of Chi-X Europe by Bats Europe owner Bats Global Markets to the British Competition Commission in June, delaying a decision to at least the end of the year. (EDiting by David Cowell)