CRESTCo announces today that a further GBP 10 million of savings will be delivered to clients from a new round of net tariff reductions, effective 1 May 2006.
Specifically, CRESTCo will:
- decrease its fee by more than 60%, from 25p to 9p, to process an electronic order-book transaction before netting;
- redefine the entire volume-discount structure and introduce a new, high-volume 90% discount band, which will reduce the cost of processing a gross transaction to as little as 1p. This new structure will better reflect the genuine cost savings generated by increased client use of the CREST system;
- reduce the annual member-account charge to GBP 1 for all member accounts, irrespective of volumes (compared with today's practice of charging GBP 5 for each member account, which falls to GBP 1 after 5,000 accounts); and
- increase its tariff for corporate-action processing by about GBP 1 million to cover CRESTCo's costs to offer this service.
CRESTCo implemented earlier in 2005 an additional range of tariff reductions totalling GBP 11 million.
Tim May, Chief Executive of CRESTCo, said: "These new tariff reductions and restructured volume-discount thresholds will enable our clients to grow their business with even lower post-trade processing costs. As SETS trading volumes continue to rise on the London Stock Exchange, and as algorithmic trading and Direct Market Access increases, CRESTCo's wholesale, custodian and retail clients will be able to reduce their marginal post-trade costs."
Clara Furse, Chief Executive, London Stock Exchange, said: "We welcome CRESTCo's latest round of tariff cuts for trades carried out on the London Stock Exchange's SETS electronic order book. This is consistent with the interest that we share with our customers in bringing down the total cost of trading, be that through easier access, reduced spreads, volume discounts or straight-through processing efficiencies. By reducing fees in line with volume growth and the recovery of their investment, CRESTCo is highlighting the benefits to customers of the horizontal market model."
CRESTCo has long supported the "cost-recovery" operating principle and has demonstrated its commitment to returning savings to clients that arise from increased economies of scale as business volumes grow. On the other hand, as CRESTCo's fees continue to decline, it should come as no surprise that fees for some services need to be more aligned with CRESTCo's costs for delivering these services.