LCH.Clearnet to discount freight fees by up to 40%

London, 01 November 2010 

LCH.Clearnet Limited (LCH.Clearnet) is set to restructure its freight clearing fees from 1 November 2010.  The new fee structure is designed to reward customer loyalty, recognises the economies of scale available in clearing and ensures that the benefits of these economies are passed on to clients.

Strong volumes in the Capesize Timecharter contract have enabled a fee cut of 20% for this contract.  In addition, a tiered fee structure in which increased volumes result in discounts of up to 40%, will also be introduced for all contracts.

LCH.Clearnet is also investing in its market leading freight clearing service, for the first time enabling straight though processing (STP) in these markets.  Furthermore, the ongoing introduction of new complementary asset classes, such as iron ore and container swaps, facilitates access to LCH.Clearnet’s large pool of open interest, maximising margining efficiencies for clearing members.

Isabella Kurek-Smith, Director, Head of Freight and Energy Markets at LCH.Clearnet said: “This move demonstrates our commitment to the freight market.  We recognise that our market leading position is due to the loyalty of our clients and our new fee structure is designed to ensure we reward this.  Our quasi utility model enables us to deliver market leading services with sustainable cost effective fees and to pass the benefits of market growth back to the users.  In addition, clients will benefit significantly from the enhanced operational efficiencies of STP.”

-Ends-

To view the press release as a pdf click here.

About LCH.Clearnet

LCH.Clearnet is the leading independent clearing house group, the world’s largest clearer of OTC derivatives and in addition serves major international exchanges and platforms.  It clears a broad range of asset classes including: securities, exchange traded derivatives, commodities, energy, freight, interest rate swaps, credit default swaps and euro and sterling denominated bonds and repos; and  works closely with market participants and exchanges to identify and develop clearing services for new asset classes.

A clearing house sits in the middle of a trade, assuming the counterparty risk involved when two parties (or members) trade.  When the trade is registered with a clearing house, it becomes the legal counterparty to the trade, ensuring the financial performance; if one of the parties fails, the clearing house steps in.  By assuming the counterparty risk, the clearing house underpins many important financial markets, facilitating trading and increasing confidence within the market.

Initial and variation margin (or collateral) is collected from clearing members; should they fail, this margin is used to fulfill their obligations.  The amount of margin is decided by the clearing house’s highly experienced risk management teams, who assess a member’s positions and market risk on a daily basis.  Both the soundness of the risk management approach and the resilience of its systems have been proven in recent times.

LCH.Clearnet is regulated or overseen by the national securities regulator and/or central bank in each jurisdiction from which it operates.