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Changes to LCH.Clearnet Fees on Euronext.liffe Derivatives

LCH.Clearnet is pleased to announce a series of changes to fees for Euronext.liffe Equity and Financial derivative contracts. Some of these fee changes will be effective on 1st November 2006, others on 1st January 2007, as explained below. The objectives of the changes across all these markets are :

• To simplify tariffs by eliminating unnecessary differences in fees between products

• To charge fees consistently across markets, following the general principle that users should pay for each service provided

• To move towards standardisation of fee levels across markets

• To make clearing fee tariffs fully transparent

• To reduce overall fee levels, in the context of volume growth.

The key changes are as follows :

• For all products, ad-valorem fee patterns are being replaced by a fixed fee per contract; Fees will be per contract in all cases, subject to caps already established in some products and markets, and will no longer be dependent on option premium level

• Equity option trade clearing fees will be standardised at a level of €0.05 / £0.03, with substantial reductions in the Paris and Brussels markets where fees are currently higher

• Exercise and assignment fees will be charged for all option products going forward

• Trade clearing fees in Amsterdam will be separated out from the current combined transaction fee

• Each contract will be charged based on the account type it is registered: client, house or market maker account

We will implement the fee changes in two steps. Those that only require parameter changes will be introduced on 1st November 2006. The more complex fee changes will be introduced from 1st January 2007, to give members enough time to make their own changes and to communicate on them with their clients.

The fee changes in each location are summarised below. Detailed tariffs for LCH.Clearnet Ltd are attached to this Circular. Tariffs for LCH.Clearnet SA are attached to the equivalent Info Flash being sent to LCH.Clearnet SA members at this time.

Fee changes effective on 1st November 2006:

London financial derivatives post-trade fees

Exercise and assignment fees for financial derivatives are being reduced from 30p to 25p per lot.

The delivery fee for gilt & bond futures is being halved to £2.50 per lot.

We expect these changes to reduce post-trade fees by around 10% when compared to current.

Amsterdam Exercise (Tender) and Assignment fees:

Option exercise and assignment fees, and tender and assignment fees for currency futures, will all be reduced to a standard of 90c per contract for broker/client accounts, 40c for house and 30c for market makers.

For Index futures (200), the tender and assignment fee will be reduced to €2.40 per contract for broker/client accounts and €1.00 for house/dealer; for light index futures (20) the fees will be half these levels.

These post-trade fees will all be subject to the same maximum charges per individual exercise/tender and assignment:

• €1,000 for broker/client
• €600 for house/dealer
• €500 for market maker

We expect these changes to result in an overall reduction in post-trade fees of over 30% when compared to current.

Brussels clearing and post-trade fees

Equity and Index option trade clearing fees will be charged a fixed rate - whatever the premium - of 5c per contract for broker/client and house accounts and 3c for market makers. Option exercise and assignment fees will be reduced to 30c per contract for broker/client and house accounts and 5c for market makers.

Trade clearing fees for index futures will also be reduced, to 40c for broker/client and house accounts and 12c for market makers. Cash settlement fees will be reduced to 90c for broker/client and house accounts and 17c for market makers.

We expect these changes to result in an overall reduction in trade clearing fees of over 60% when compared to current, and an overall reduction in post-trade fees of over 80%.

Lisbon clearing and post-trade fees:

Clearing fees for Equity and Index futures contracts will be standardized at 5c for broker/client and house trades and 3c for market maker trades while cash settlement fees will be standardized at 30c for broker/client and house and 5c for market maker accounts.

In parallel, Euronext.liffe have decided to reduce the trading fees applicable to the futures contracts traded in the Lisbon market, with effect from 1 November 2006. Please refer to the Notice issued by Euronext.liffe for details.

Fee changes effective on 1st January 2007:

Amsterdam clearing fees:

Trade clearing fees will be separated out from the current combined transaction fee and will no longer be dependent on option premium level. At the same time, Euronext.liffe trading fees will also be separated out.

The clearing fee for equity and index options, and for currency options and futures, will be 5c per contract for broker/client and house trades, 3c for market maker trades. For index futures, the clearing fee will be 13c per contract whatever the account type.

Clearing fees will all be subject to the same maximum charges, applied per order as at present:

• €40 for broker/client
• €20 for house/dealer
• €10 for liquidity provider

In parallel, Euronext.liffe is publishing its own trading fees for the Euronext.liffe Amsterdam market. Where possible the combined trading and clearing fee after the fee split is equal to the transaction fee before the fee split. This is however not possible for trades booked on the client account when the transaction fee is €0.00. After the fee split a clearing fee will be applied to these trades. Please refer to the Notice issued by Euronext.liffe for details of trading fees.

System changes to calculate and invoice clearing and trading fees separately are under way and will be subject to further communication.

Paris clearing and post-trade fees:

Clearing fees for American-style equity options will be reduced to 5c per contract for broker/client and house trades, and 3c for market maker trades; for European-style fees will remain at 2c and 1c per contract respectively. The fee tariff for very large equity option trades will be unchanged.

Index options and futures will be charged 13c per contract for broker/client and house trades and 5c for market maker trades on options and electronic local trades on futures.

Exercise and assignment fees will be introduced for all option contracts; for American-style equity options (contract size of 100) and index options (PXA) the fees will be 30c per contract for broker/client and house accounts and 5c per contract for market maker accounts. For European-style equity options the fees will be 5c and 2c per contract respectively.

Index future cash settlement fees will be reduced to the same levels of 30c for broker/client and house accounts and 5c for electronic locals.

The current maximum monthly charge for market makers on options will be amended to an equivalent maximum charge of €100,000 per annum; option exercise and assignment fees will be included in this annual maximum charge.

We expect these changes to result in an overall reduction in clearing and post-trade fees of over 40% when compared to current for broker/client and house accounts.

London equity and index derivatives post-trade fees

For equity and index options on central order book, exercise fees are being halved to 20p per lot and assignment fees are being introduced at the same rate: these two changes balance out.

Cash settlement fees on universal stock futures on central order book are being reduced to this same rate of 20p per lot for UK contracts and to 30c for non-UK.

The Bclear tariff is being changed to introduce assignment fees, to reduce exercise fees for UK equity options, and to reduce exercise and cash settlement fees for most index options and futures.

We expect these changes to be broadly neutral for equity and index derivatives post-trade fees.