LCH.Clearnet SA and Euronext have announced a series of reductions in clearing fees from 1 January 2007 that they saw will average 15%. The proposed reductions include fees collected on behalf of Euronext – the “retrocession” on trades executed on Euronext cash markets – as well as orthodox clearing fees.
In addition, a further market volume discount will be applied to the clearing component only of the fee; an extra 20% clearing fee discount will be applied on volume exceeding 740,000 postings a day (equivalent to 370,000 trades a day) across members. This could amount to a maximum discount of 26% on the combined fee components, says LCH.Clearnet.
The impact of these changes will represent, on average, a total decrease of 3% for market participants trading on the Euronext Amsterdam and Lisbon segments, a decrease of 6% for those trading on Euronext Brussels and a decrease of 19% for those trading on Euronext Paris.
This joint fee reduction, involving both LCH.Clearnet and Euronext, is an additional step following that already implemented in January 2006 for stocks listed on the Euronext Paris market.
In order to improve transparency on the fees collected by LCH.Clearnet and Euronext, the current combined clearing fee will, from 1 January 2007, be unbundled into two separately identifiable fees: a Clearing fee and an Exchange fee.
The reductions announced yesterday follow those announced by LCH.Clearnet Limited for London last week. The clearing house says they “reflect the outstanding growth in cleared volumes.”
As in London, says LCH.Clearnet, the reductions also represent no more than the first stage in an ongoing programme of tariff reduction by the CCP for clearing cash equities. “Marginal costs are relatively low for central counterparties, and, as a consequence, the Group is undertaking a comprehensive review of its tariffs generally, with a view to introducing a pricing structure which will better reflect the structure of its cost base, including a greater concentration on discounting fees at high levels of activity,” explains LCH.Clearnet in a statement.
Roger Liddell, LCH.Clearnet Group Chief Executive, says the equity clearing fee reductions in London and on Euronext complete “the first phase of the Group’s plans to deliver lower clearing tariffs for clearing equities across our range of cash market customers. As I have said elsewhere, we are determined to set tariffs at reasonable and competitive levels, whilst ensuring that we can continue to deliver high quality clearing services across all our market segments. I now look forward to the outcome of our fully comprehensive Group review, which we will be announcing at the end of the year.”
Jean-Franois Thodore, Chairman of the Managing Board and CEO of Euronext, claims the cuts prove the “efficiency of our horizontal business model.”