Declining volumes and fee reductions contributed to a €16.3 million fall in 2010 equity clearing revenues at LCH.Clearnet, but the Anglo-French central counterparty (CCP) hopes that progress towards post-trade interoperability in Europe could reverse the trend.
Total revenue at LCH.Clearnet decreased 39% from €907.3 million in 2009 to €553.6 million in 2010, while overall clearing revenues at the group fell to €203.4 million from €221.3 million the previous year.
Equity clearing revenue fell to €44.3 million from €66.6 million year-on-year, and also declined as a proportion of overall clearing revenue from 27.4% in 2009 to 21.8% in 2010. A statement from LCH.Clearnet CEO Roger Liddell noted, “Tariff reductions in equity clearing fees implemented in 2009 and 2010 largely contributed to a fall in clearing revenue”.
He added, “Overall, the volume of exchange traded equities fell as volumes cleared for NYSE Euronext, the London Stock Exchange and SIX Swiss Exchange slipped by 8.4%, 6.8% and 7.6% respectively.”
In December 2010, Wayne Eagle, head of markets at LCH.Clearnet, told theTRADEnews.com that interoperability between his firm and other CCPs, including EuroCCP, EMCF and SIX x-clear, was set to come into force from Q1 this year. While this now looks unlikely, Liddell said that firm plans to “begin interoperating as soon as possible”.
Interoperability would enable brokers to select a single clearer across multiple trading venues. This would enable a reduction in trading costs, as brokers would no longer need to connect to multiple CCPs across Europe to process trades executed on different trading venues.
LCH.Clearnet's results also showed an increase in OTC derivatives clearing income, from €16.8 million – or 7.5% of total clearing revenues in 2009 – to €21.2 million, or 10.4% of clearing revenues last year. The revenue gained from clearing exchange-traded derivatives declined from €82.4 million in 2009, to €74.5 million in 2010.