Source: Euroclear, London Stock Exchange
Euroclear UK & Ireland will reduce its trade netting tariff as of 1 March 2010, having completed client consultations. Its combined trade netting and settlement fees, which currently represent less than 10% of the cost of a transaction on the London Stock Exchange, will decline to less than 5%.
Euroclear UK & Ireland's total charges (including settlement) to largevolume trading firms will drop to GBP 0.009 (0.9 pence) per transaction compared with GBP 0.022 (2.2 pence) per transaction.
The most notable change in Euroclear UK & Ireland's trade netting tariff is that clients will be charged per netted transaction rather than per gross transaction. The new tariff will apply to Euroclear UK & Ireland's trade netting services for the London Stock Exchange, the Irish Stock Exchange and other trading facilities using this service.
As trading volumes increased over the past three years, Euroclear UK & Ireland has reduced its trade netting fee by more than 70%. This latest reduction and tariff restructuring means that the cost to clients for using Euroclear UK & Ireland's trade netting service will have declined by 90% since 2006.
As a user-owned, user-governed market infrastructure service provider, Euroclear UK & Ireland does not operate on a profit-maximisation basis. In this respect, modest changes in fee structures across a range of other Euroclear UK & Ireland services will also be implemented on or soon after 1 March.
Yannic Weber, Chief Executive Officer of Euroclear UK & Ireland, commented: "We thank our clients, the Association for Financial Markets in Europe (AFME) and other securities market representatives for participating with us during the consultation process to affirm the trade netting model and tariff structure they prefer. Euroclear UK & Ireland will, of course, continue to provide trade netting services, as requested by our clients. The new tariff reductions reinforce our willingness and flexibility to identify new ways to provide value at a reasonable cost for our clients. Given the long-term and constructive business relationships we have with the London Stock Exchange, LCH.Clearnet and SIX x-clear in particular, we have also taken into account the competitive pressures these business partners are currently experiencing."
In aIn a seperate release, the London Stock Exchange today welcomes Euroclear UK & Ireland's (EUI) decision to remove the gross charge for the netting of London Stock Exchange trades.
The Exchange estimates this will save its customers in the region of £10m in the next year in lower post trade costs for their SETS business.
Kevin Milne, Director of Post Trade Services said:
"We are very pleased that EUI has removed the gross charge for netting SETS trades. In addition to our own ongoing tariff cuts, this move will further reduce the overall cost of trading for our major clients and level the playing field with our competitors.
"We would like to thank EUI for their constructive approach in working with us and our customers on this issue. We remain committed to working with all parties to continue to bring down the cost of post trade services."