23 Dec 2011

What are LCH.Clearnet's numbers for 2010?

I've already provided figures for transactions in the UK for 2010 based on the B.I.S. provisional figures that came out in September. There was a major hole in the figures, because LCH.Clearnet hadn't provided their numbers. This is a serious problem, because LCH.Clearnet handles up to 75% of all the transactions in the UK. For example, in 2008, the B.I.S. figures added up to £1,151 trillion, of which 862.6 trillion were sterling transactions handled by LCH.Clearnet (to which we can add 12.5 trillion of transactions in euros).

Unfortunately, I don't know when the final B.I.S. figures will come out.  The delays vary from year to year. Final figures for all the years from 2002 to 2009 came out with a delay of 15 months, which would mean that we should get the final figures for 2010 in March 2012. However, the figures for  2008 came out in December 2009, I may just get the answer this week.

Anyway, I thought it would be interesting to get some idea of what on earth LCH.Clearnet does. If you go to their website, you can find a list of their fees for doing transaction fees. They have different sets of fees for 9 types of transactions
The EquityClear fees are interesting. The rates for handling transactions go from  10p each for the first 10,000 transactions made each month. But for those traders who can manage more than 150,000 transactions in a month, all further transactions are free of charge. Great for high-frequency traders who do millions of transactions every second.

Another interesting one are SwapClears - used by people doing trades in Credit Default Swaps I presume. Good news for them - "There are no transaction fees for SwapClear®. Members pay a fixed annual clearing fee to participate in the SwapClear service."

But my favorite is the RepoClear fee structure. Repos are repurchase  and resale agreements whereby people can temporarilly transfer ownership of assets. David Malone's excellent Golem XIV blog has a nice description of this highly dubious system in his Liar's Lexicon. The LCH.Clearnet site gives an example of a €100 million trade lasting one year, for which they would charge just €1323.22.

Anyway, the point is that if ever someone wanted to impose a Financial Transaction Tax, it would be enough to force one company, namely LCH.Clearnet to play game, and it would cover up to 75% of transactions. What are we waiting for?

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