LCH.Clearnet, Europe’s largest independent clearer, on Thursday said it planned to cut its fees further by “at least 50 per cent” as it revealed an initial 30 per cent discount on clearing of four continental European cash equities markets.
The move came a day after the fate of the clearer for the London Stock Exchange took a fresh twist when the Depository Trust & Clearing Corporation, the US clearing and settlement system, abandoned a proposed takeover. The deal would have created the world’s largest post-trade group.
LCH.Clearnet is now braced for a cash offer from a consortium of 11 banks and Icap, the inter-dealer broker, expected next month. It is also working on an management-driven proposal to “rebalance” its diverse shareholder base, consisting of exchanges, banks, brokers and Euroclear, the European settlement system.
LCH.Clearnet said it would cut by 30 per cent cash equity clearing fees for markets served by NYSE Euronext, Bourse de Luxembourg, Equiduct and SmartPool from July 1.
Users of LCH.Clearnet have complained that some of its fees are considerably higher than those levied by new clearing platforms that have emerged to support a new breed of alternative share trading facilities, such as Chi-X and Turquoise.
They are also frustrated that LCH.Clearnet, formed in 2003 from the merger of the London Clearing House and Clearnet SA of Paris, still operates two different fee structures and technology systems, each based on the former LCH and Clearnet SA units.
Alberto Pravettoni, head of strategy at LCH.Clearnet, said that the clearer was addressing those issues. On pricing, “the plan we are are working on is to being it down by at least 50 per cent [more]”.
He declined to specify a timetable.
While competition between Europe’s exchanges and the new platforms has driven trading fees down, clearing fees have come down more slowly. Yet
clearing fees account for the bulk of the overall cost of trading.
NYSE Euronext offers trading in shares in Paris, Amsterdam, Brussels and the Portuguese markets. Equiduct is one of five new share trading platforms, while SmartPool is a “dark pool” block trading facility launched this year by NYSE Euronext.
In addition to clearing for the London Stock Exchange, LCH.Clearnet clears for Euronext and the London Metal Exchange.
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