EuroCCP now provides a monthly billing supplement to customers that shows clearing costs on the value of trades cleared. Settlement costs are likewise shown on the value of trades cleared.
Clearing fees are typically based on a fixed fee per trade cleared, irrespective of value, while trading fees are based on the value of the trade. The difference in fee structure has made it difficult for firms to estimate and compare all-in costs on trading venues, particularly if they use different CCPs.
EuroCCP presents post-trade and trading costs in equivalent terms to enable an estimation and comparison of all-in costs. Clearing and settlement costs billed to customers are shown in basis points on the value cleared, consistent with fees charged by trading venues on the value of trade executions. A basis point is 100th of 1%.
EuroCCP’s presentation of clearing costs in basis-point terms also facilitates the inclusion of clearing and settlement costs in smart order routers, enhancing trading firms’ ability to manage clearing costs effectively. Cost predictability is essential for trading firms.
Diana Chan, CEO of EuroCCP, said: “With our basis-point data, we are providing our participants with a valuable tool for managing their costs. Our basis-point data delivers the fee transparency and predictability that are critical to promote further competition in Europe’s securities markets.”
Robert Barnes, managing director of equities at UBS Investment Bank, said: “EuroCCP should be commended for enhancing tariff transparency. Cost-per-ticket trends are subject to bias, for example as electronic trade sizes shrink. By adding value processed on its invoices, EuroCCP enables basis-point comparability, a more meaningful metric for competitive landscape cost analysis.”
