LCH.Clearnet cuts LME clearing fees

The cost of clearing contracts executed on the London Metal Exchange (LME) will fall by an average of 15 per cent in 2008 under new fee reductions to be implemented by LCH.Clearnet. Clearing houses such as LCH.Clearnet have recently come under pressure from the European Union and market participants to cut their fees and help drive down the cost of clearing and settlement in Europe. The ‘access and interoperability' provisions of the European Code of Conduct on Clearing and Settlement - introduced by the EU in November 2006 - means that clearing houses now face the prospect of real competition from rival service providers. Earlier this year the Intercontinental Exchange unveiled plans to set up a new London based European clearing house that could compete with established players such as eurex and LCH.Clearnet. LCH.Clearnet has responded by seeking access to new markets - most notably Germany and Italy - under the provisions of the Code of Conduct and initiating wide ranging fee cuts in its existing markets. The company has already reduced fees in a number of other segments - including cash markets, financial and equity derivatives markets, and energy markets - over the past 12 months, though the reductions announced today are the first for trades executed on the LME. Roger Liddell, group chief executive at LCH.Clearnet, said: "I am very pleased to see this extension of our clearing fee reduction programme encompassing business executed by our members on London Metal Exchange, the final exchange market cleared by LCH.Clearnet to benefit from the programme." He promised that further price cuts were in the pipeline. "This is by no means the end of our fee reduction programme; we are determined to continue our drive to lower clearing fees for our members whilst maintaining high quality clearing services, and we will be announcing further cuts in other asset classes in the near future," he said. Precise details of the revised tariff, which will come into force on 1 January 2008, are currently being finalised and will be published in the near future.