Pan-European clearing house EuroCCP has introduced a new billing feature that presents clearing fees in the same format as those for execution, allowing customers to calculate their total cost of trading, clearing and settlement more easily.
EuroCCP now provides a monthly billing supplement to customers that shows both clearing and settlement costs in terms of basis points on the value of trades cleared.
In Europe, clearing fees are typically based on a fixed fee per trade cleared, irrespective of value, while trading fees are based on value. This mismatch, argues EuroCCP, has made it difficult for firms to estimate and compare the all-in costs of using specific trading venues, particularly if they use different central counterparty (CCP) clearers.
EuroCCP also contends that the new billing format also facilitates the inclusion of clearing and settlement costs into smart order routers, enhancing trading firms’ ability to manage clearing costs effectively.
“Cost-per-ticket trends are subject to bias, for example as electronic trade sizes shrink,” said Robert Barnes, managing director, equities at UBS Investment Bank, in a statement. “By adding value processed on its invoices, EuroCCP enables basis-point comparability, a more meaningful metric for competitive landscape cost analysis.”
Diana Chan, CEO of EuroCCP, added, “Our basis-point data delivers the fee transparency and predictability that are critical to promote further competition in Europe’s securities markets.”
EuroCCP launched the basis-point initiative after a month-long pilot phase, during which customers provided their input and recommendations.
EuroCCP is the European subsidiary of US post-trade utility The Depositary Trust & Clearing Corporation. It currently clears equity trades from multilateral trading facilities Turquoise, SmartPool, NYSE Arca Europe and Pipeline.