Brazil, Spain and Australia among the Most Expensive Countries to Clear – Study

A recent study from Market Structure Partners (MSP) has found Brazil has the highest clearing costs for securities trading than any other country in the world, followed by Spain then Australia.

The research from MSP, a consultancy and advisory firm, was commissioned by some of the world’s biggest clearing members including Pershing, Citi, Deutsche Bank, Credit Suisse, Morgan Stanley and Bank of America Merrill Lynch.

According to the study, markets where the exchange controls the clearing entity, the cost for clearing and settlement is the highest. For example in Brazil where BM&F Bovespa operates both the main securities exchanges and the only clearinghouse, the total clearing at settlement costs for a large intermediary firm is 2.75 basis points (bps).

This is also the case in Spain where Bolsas y Mercados Españoles (BME) operates the country’s securities exchange, as well as Spain’s only derivatives clearing houses, BME Clearing, and through its subsidiary Iberclear, it clears and settles all trades from the Spanish stock exchanges.

Furthermore looking at value and number of trades cleared vs the average cost to clear them, the report shows Australia as the second most expensive market after Brazil, even once economies of scale have been accounted for.

“We note in the report that the three most expensive markets for post-trade – Spain, Brazil and Australia – are all markets with one dominant exchange, where the issue of clearing has not been addressed by regulators prior to the listing of an exchange,” says Niki Beattie, CEO, Market Structure Partners.

“It looks like in these markets there is room for improvement when you examine the cost of clearing.”