LCH.Clearnet says that from 1 July 2006 the 3.5p cross-CCP fee collected by virt-x in respect of trades cleared by LCH.Clearnet will no longer be charged.
The London-baserd CCP says this represents an earlier than announced removal of the tariff, and equates to a 15% reduction in LCH.Clearnet’s virt-x clearing fee.
The 3.5p fee was introduced in mid-2005 by LCH.Clearnet as a temporary tariff to recover some of the revenue lost when commercial arrangements between SIS, x-clear and LCH.Clearnet in respect of clearing the virt-x market were restructured.
Within these arrangements LCH.Clearnet agreed that x-clear would no longer pay clearing fees to LCH.Clearnet in return for the removal of the SIS Infrastructure charge and the direct settlement costs levied on LCH.Clearnet.
Whilst LCH.Clearnet members have been advised that this component of the fee would not apply to the clearing of trades on SWX, which goes live on 8 September, and would be removed from the virt-x service on postintegration tariff harmonisation anticipated by mid-2007, strong volumes through the year to date support making this change now, says LCH.Clearnet.
“As an essentially fixed cost business, and as costs fall and the volumes we clear increase, LCH.Clearnet continually looks to reduce the fees charged for its wide range of services,” says Christophe Hmon, Chief Executive – LCH.Clearnet SA, and Managing Director – LCH.Clearnet EquityClear. “This is not only recognised in our volume discounted tariff structures but also in our ability to remove or reduce certain specific tariffs as appropriate. Our commitment to meeting our customers’ needs is at the forefront of setting our development agenda and we continually seek to ensure that our services are competitive and deliver sustainable value.”