Swiss central counterparty (CCP) SIX x-clear will cut its prices and introduce a new volume-based tariff structure from 1 January 2011.
The new pricing model will replace SIX x-clear's current tariff structure with a new sliding scale based on monthly transaction volumes. SIX x-clear is simultaneously reducing its prices, which it believes will result in significant cost reductions to clients of 15% on average and up to more than 30% for its largest clients.
All clients with ratings that are investment grade, from AAA to BBB+, will be charged according to the same tariff scale.
Under SIX x-clear's new tariff structure, a client's monthly volume across all SIX x-clear markets will contribute to its total transaction volume. This in turn should lead to discounts for customers using SIX x-clear’s clearing services across multiple markets.
Kevin Milne, head of post-trade at the LSE, welcomed SIX x-clear's cuts, saying, “We are delighted with this new tariff model and pricing structure. It ensures that we can derive greater value – in a sustainable and predictable way – without having to compromise on quality in any way.”
SIX x-clear is trying to strengthen its position as a pan-European CCP. The post-trade landscape in Europe is currently seen as expensive. Attempts to bring about interoperability between CCPs, which would create competition and theoretically lower prices, have been hindered by regulatory concerns. They halted the process on 12 February 2010, asking CCPs to provide additional arrangements for raising collateral, in order to support the inter-CCP risk that is created by interoperability.
In the interim while these arrangements were made, exchange group NYSE Euronext, a member of LCH.Clearnet, decide to build its own clearing facility by 2012 to save money. The London Stock Exchange (LSE) put its relationship with LCH.Clearnet under review.
Recent submissions to the Swiss, Dutch, and UK regulators by SIX x-clear and the other pan-European CCPs LCH.Clearnet, EuroCCP and EMCF are expected to persuade regulators that sufficient arrangements are now in place and that interoperability should now occur.
However the actions of the exchanges have increased the pressure on the clearers. EMCF and EuroCCP are now rumoured to be discussing a merger. LCH.Clearnet announced a cut to its fees on 31 August 2010.