LCH SwapClear Client High Turnover Plan Commercial Changes
LCH Circular No. 4275
09th September 2023
All LCH Ltd SwapClear High Turnover Plan Clients
Dear SwapClear Clients,
We are writing to you to let you know that SwapClear will be updating its High Turnover client fee plan (the “HTO plan”) effective 1st of February 2024, subject to regulatory approval.
This circular outlines the HTO plan fee changes, the overall rationale for these changes together with the timeline for implementation.
SwapClear High Turnover Client Fee Plan
LCH and its SwapClear service are dedicated to providing the global financial sector with a market leading clearing service. LCH has continually invested in its service and product offering including changes directed by client and member feedback and regulatory requirements.
Investments in service enhancements include delivery of extended opening hours, enhanced risk methodologies, extensions to eligible collateral, more self-help features (LCH Knowledge Centre) and improved client experience, which is fundamental to all that we offer. There has been significant investment in core resilience including computation, capacity, cyber defences, open access and upcoming strategic investment to enable application upgrades and further infrastructure upgrades.
Investments in product enhancements have allowed LCH to deliver clearable tenor extensions, migration to Risk Free Rates (RFR) and OIS indices to support regional markets (recently SEK, DKK, MXN, HKD and ILS), and expansion of the inflation and non-deliverable swaps modules.
New SwapClear High Turnover Client Fee Plan from 1st of February 2024
Effective 1st February 2024 the HTO plan registration booking fees will increase by USD $2.50 per trade. The maintenance charge will be tiered based on the number of new trades registered in the prior quarter. Due to the tiering, SwapClear will introduce a maximum number of 75 funds for a single client group using the HTO plan. Any client group with greater than 75 funds will incur a USD $5,000 maintenance charge per annum for each additional fund over that maximum.
Please refer to Appendix A for a summary of these changes.
SwapClear will continue to conduct periodic reviews of client fees with the option of adjusting these in line with usage, inflation, platform and/or product enhancements. This will allow us to continue to provide the level of service, product development and enhancements our clients have come to expect.
If you have any comments or questions regarding any aspects of the plan in more detail please contact your LCH representative or get in touch via LCHSales@lseg.com.
LCH Relationship Management
Summary of Changes to the High Turnover Client Fee Plan
|Type||2023 Structure||2024 Structure|
|Booking Fee (IRS, OIS, NDIRS)||$25||$27.5|
|Booking Fee (Inflation Swaps)||$37.5||$40|
|Maintenance Charge (basis points on Initial Margin)||10bps||Tiered maintenance charge based on trade volume:|
|11 bps (< 3,000 trades in prior quarter)|
|10 bps (>= 3,000 trades in prior quarter)|
|Maximum of 75 funds for a single client group||N/A||$5,000 per annum for each fund over that maximum|
Implementation Details for the High Turnover Client Fee Plan Changes
The below outlines the implementation details for the above mentioned High Turnover client fee plan changes:
- Tiering will be applied from 1st February 2024 and on each following calendar quarter, based on volumes from the previous calendar quarter.
- Only new trade clearing activity will be taken into consideration for calculations (i.e. post clearing events will not be included).
- Calculation of activity will be counted at the client group level and applied to all funds in the relevant client group which are subscribed to the HTO plan.
- New clients on the HTO plan will be subject to a 10bps maintenance charge until they have completed a full calendar quarter of clearing activity; subsequent quarters will be based on actual activity from the previous quarter.
- The basis point rate for the maintenance charge will be published on REP00310c ‘Client Fee Summary report’.
- The fee for funds in the same client group in excess of 75 will be charged semi-annually.