SIX x-clear, the clearing arm of SIX Securities Services, is launching a new incentive program to win business on trading venues that offer post-trade interoperability.
The clearer's new fee structure is intended to encourage new and existing clients to consolidate their clearing volumes with SIX x-clear across multiple exchanges and multilateral trading facilities (MTFs). SIX Securities Services, part of the Swiss market infrastructure provider SIX Group, says that the offer underpins its commitment to interoperability and to passing cost reductions onto clients.
The incentive program will apply to all flows from trading venues where a client currently does not use SIX x-clear. Clearing will be charged at CHF 0.01 (€0.0085) per clearing transaction if the total current volume of a client exceeds 1.5 million clearing transactions per month. In all other cases CHF 0.025 (€0.021) per clearing transaction will be charged. The clearer's standard charges are €0.20 up to 50,000 transactions, €0.10 to 250,000, €0.05 to one million and €0.01 for over three million transactions per month.
This programme, valid with immediate effect until the end of 2012, replaces any current incentives.
Robert Barnes, CEO of UBS MTF – which uses SIX x-clear but expects to secure regulatory approval for clearing interoperability before the end of Q3 – says European central counterparties (CCPs) are dismantling previous barriers to interoperability.
“Regulators have indicated that in addition to standard collateral there will be extra cushion collateral required around interoperability,” he said “CCPs are responding by being nimble on fees and, in the case of SIX x-clear, functionality too.”
SIX x-clear clients must post CHF 100 million (€85 million) of collateral, in the form of a loan, for trades executed on venues that support interoperability, but SIX x-clear will match the amount to cover the additional collateral requirements.
If the client's volumes require additional collateral, SIX x-clear may also provide further support. The following month's collateral requirement is calculated based on the trading for the previous month.
Fellow clearer LCH.Clearnet calculates the margin requirement each day, with collateral posted and returned to the client on the same basis.
The cash or securities put forward as collateral to support interoperability are segregated and held between the other CCPs by a third party in Luxembourg.
Europe's only live clearing interoperability scheme operates between LCH.Clearnet and SIX x-clear, which allows users of the SIX Swiss Exchange and the London Stock Exchange to select between the two clearers. The arrangement was set up in 2008 but, along with other planned interoperability arrangements between CCPs, it was suspended in Q1 2010 when the Dutch, Swiss and UK regulators asked the CCPs to revise their arrangements based on increased risk arising from the interconnectedness. It was given the all clear once again by Swiss and UK regulators in May 2011.
MTF BATS Europe plans to introduce a preferred interoperable clearing programme at the end of July which will allow counterparties to select a preferred clearer out of EuroCCP, LCH.Clearnet, and SIX x-clear. If either counterparty does not express a preference, both sides of the trade are cleared by Dutch firm EMCF, the incumbent CCP, which has said it will not participate in interoperability arrangements.
A preferred clearer model is under review at Nasdaq OMX Nordic, the market operator that manages exchanges in Finland, Denmark, Sweden, Iceland, Estonia, Latvia, and Lithuania.
“This is one of the models that we are considering moving forward,” said a Nasdaq OMX spokesperson. “It’s too early to talk about a timeline. This will be defined once we have established what clearing strategy is the most suitable one for our business and our customers.”
EuroCCP announced that it would be offering lower fees from 29 July to coincide with the launch of BATS Europe's new clearing model.