CRESTCo will decrease by 25% both its tariff for stock-exchange transaction processing and its messaging fees for the communication of transaction information to and from clients. In particular, the fee charged for the netting of exchange bargains will be cut by 67% from 15 pence to 5 pence per trade, falling to as low as 1 penny for clients in the highest volume-discount band, considerably reducing total clearing and settlement costs for clients.
Tim May, Chief Executive Officer of CRESTCo, said: “Since our last tariff review in 2001, we have pursued an active phase of investment to further enhance our services, increase transparency and deliver additional cost savings to the market. We are also making excellent progress in delivering, with the other entities of the Euroclear group, the harmonised and consolidated group settlement infrastructure for the benefit of all CRESTCo and Euroclear clients. Taking a conservative view of our future funding requirements, we are now in a position to share efficiency gains and cost synergies with our clients through these new tariff reductions.”
He continued: “We are convinced that these price cuts will further enhance the attractiveness of London as an internationally competitive market for the trading, clearing and settlement of securities transactions. As our business volumes continue to grow, we will look to deliver even lower tariffs in the future and provide additional cost savings through service enhancements and platform consolidation.”
Stock exchange transactions
In February 2001, the London Stock Exchange, LCH.Clearnet and CRESTCo introduced a central counterparty (CCP) service for trades executed on SETS, the LSE’s electronic trading service. CRESTCo provides a transaction-processing service to support the use of the CCP. Since then, the benefits of this service have been extended to virt-x trades. CRESTCo now plans to offer the same service for the clearing and settlement of Irish Stock Exchange trades, in conjunction with Eurex Clearing AG, subject to conclusion of satisfactory contractual arrangements.
The key changes, effective from 1 April 2005, are as follows:
- the ‘Headline Netting Fee’ will be reduced by 67%, from 15 pence per trade to 5 pence, falling to 1 pence per trade in the highest volume-discount band;
- the ‘Direct Input Charge’ will be reduced by 50%, from 8 pence to 4 pence per trade.
In parallel with the growth in equity trading and settlement since the launch of the central counterparty service, the number of messages processed to support settlement on the CREST system has also increased. Accordingly, CRESTCo clients will share the benefits of the economies of scale resulting from these volume increases via a 25% reduction in message input and response fees. This change, which comes into effect on 1 July 2005, will particularly benefit the retail broking community, for whom messaging has become a key element of their overall usage of CRESTCo’s services.
