EuroCCP, the European arm of The Depository Trust and Clearing Corporation of the US, is set to slash the fees it charges trading firms, which is likely to spark competition in the post-trade sector when they are given the chance to choose their clearer for the first time.
The fee cut is set to coincide with the introduction of the first multi-party linking agreement among European clearing houses. This will allow trading firms to choose which clearing house they want to clear their trades, instead of being – as they are now – forced through the clearer chosen by the exchange or platform on which they are trading.
Andrew Simpson, head of business development at EuroCCP, said: "This cut is about delivering the benefits of our scale and at-cost business model to our clearing members. Our costs at higher volumes are minimal and we feel we should pass that onto customers”. Last month, alternative trading venue, Bats Europe, revealed plans to launch what it termed as a "preferred interoperable clearing programme" which will allow firms trading on the platform the choice of three clearers: Anglo-French clearer LCH.Clearnet, the Swiss firm SIX x-clear or EuroCCP. Should the firms not elect any of these clearers, the Dutch-based European Multilateral Clearing Facility will continue to act as the default clearer for Bats.
The deal, which is still pending regulatory approval, and the competition it will engender, is key to growing the European market according to Simpson. He said: “As the industry reaches the first stage of interoperability we want to be at the forefront of fee reductions, which will in turn help to bring increased volumes to the European market".
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