17 Feb 2012

LCH.Clearnet Ltd : More numbers but still question marks

I've been trying to discover what the true levels of transactions handled by LCH.Clearnet Ltd are. As you may have seen, they failed to provide the numbers for the BIS 2010 annual report which came out a few weeks ago. Given that the numbers for 2008 were so huge - £862.5 billion - the true numbers are clearly of considerable intersest.

I was able to download the latest company financial report for 2011 that provides some insights.  I appears that the company's income come essentially from four types of Clearing fees

Fixed Income   : €42.9 million (up 13% since 2010)
OTC Derivatives (SwapClear) : €44.2 million (up 108%)
Commodities and listed derivatives : €105.6 million (up 1%)
Cash equities : €44.0 million (up 10%)

Of these, we get to hear about the transactions behind two of them:

"In Fixed Income we cleared over €152 trillion of nominal volumes, up 11% on 2010"
"During 2011 SwapClear grew steadily to $283 trillion"

Looks like my guesstimate of $270 trillion for Interest Rate swaps wasn't too far off. 

We don't get any numbers for the transactions for either Commodities and listed derivatives or for Cash equities. Given the amount that they earn for the company, I'm prepared to guess that they may be pretty huge too. Maybe this explains why the level of transactions reported for LCH.Clearnet in 2008 was so high. If the fee schemes are proportional to the transactions, we can guess that the amounts of trading in commodities may be well over twice the amount of fixed income trades.

Anyone care to guess?


  1. Simon, I don't know why they didn't publish them (perhaps the actual exchanges do?) however if you walk into LCH reception in London there is a video on a continous loop that broadcasts volumes in all key products. Also it may be worth noting that your label of "fee income" is a little inaccurate. Actually fees are pretty low and the majority of the LCH income in most product lines derives from treasury income earned on margin.

  2. Hi Stephen,

    You're right that the fee structure is pretty low. When you handle  €152 trillion euros of fixed income transactions, and only charge €42.9 million in fees, that's an effective charge of 0.00003%. So, yes, increasing the charges to 0.03% (for example) with an FTT would maybe have some effect. And it would hard to undercut them!

    If you're dropping by, maybe you could make a note of the numbers? I'd like to get my list of transactions in the UK as realistic as possible....