SwapClear® Fees

SwapClear Self-Clearing Fees from 6 May 2013

A single tariff is applied to a Member in relation to all contracts cleared by that Member and any Member within its Member Group, either for their own account or on behalf of a SwapClear Dealer or an Affiliate, within a calendar year. A new Member should notify LCH.Clearnet of its preferred tariff when joining the SwapClear service.

Tariff B: Introductory Tariff

1. The Introductory Tariff (“B”) is applied to a Member Group that is not subject to the Standard Tariff or Ultimate Tariff.
2. Under the Introductory Tariff a Member Group is charged £500,000 in equal monthly installments of £41,667, plus £75 per contract booking fee and a £6 per existing contract maintenance fee per month.
3. Where a Member Group’s total fees incurred by that Member Group reach £1,500,000 in any calendar year then no further fees are payable for the remainder of that year unless more than 20,000 contracts are cleared in which case Tariff A2 will apply.
4. A Tariff B Member Group that does not reach the Tariff B fee cap of £1,500,000 within the calendar year will begin the following year on Tariff B.
5. A Tariff B Member Group which reaches the £1,500,000 fee cap within the calendar year will automatically begin the following year on Tariff A2 or Tariff A1 depending on the cleared volume.
6. A Tariff B Member Group can at any time elect to move to a alternative tariff to commence the following year.

Tariff A2: Standard Tariff

1. The Standard Tariff (“A2”) of £1,500,000 per year is designed for a Member Group which is expected to clear less than 30,000 contracts per year.
2. No booking fee or maintenance fee is applied to the first 20,000 contracts cleared in a calendar year for a Member Group under Tariff A2.
3. Cleared contracts in excess of 20,000 in one calendar year incur a booking fee of £75 per contract but no maintenance fee.
4. Fees are collected in equal installments of £125,000 plus any booking fees (where applicable) monthly in arrears and an invoice is posted to the relevant Member’s account.
5. Member Groups using the Standard Tariff will have a fee cap of £2,250,000 in any calendar year, equating to 30,000 cleared contracts annually. Where the fees payable in relation to a Member Group reach £2,250,000 in any calendar year then no further fees are payable that year and the Member Group will automatically be invoiced at Tariff A1 for the following year.
6. A Standard Tariff Member Group can at any time elect to move to the Ultimate Tariff to commence the following year.

Tariff A1: Ultimate Tariff

1. The Ultimate Tariff (“A1”) of £2,250,000 per year is designed for a Member Group that is expected to clear 30,000 contracts per year or more.
2. Member Groups are charged a flat monthly fee of £187,500 payable in arrears. No booking or maintenance fees are payable. An invoice is posted to the relevant Member’s account.

In addition there is a one-off on boarding fee of £50,000 for each new SwapClear Clearing Member, FCM Clearing Member, SwapClear Dealer or Affiliate.

A "Member Group" means a SwapClear Clearing Member or an FCM Clearing Member and its direct and indirect subsidiaries, its direct and indirect holding companies and every direct and indirect subsidiary of each such holding company, from time to time. For the purposes of this definition: (i) ‘subsidiary’ means a company in which an entity owns 50% or more of the equity interest; and (ii) ‘holding company’ means a company that owns 50% or more of the equity interest in another entity.

Changes in a entity’s corporate ownership may lead to changes in the tariff that applies to it.

Terms used herein are as defined in the rulebook of LCH.Clearnet.

All clearing fees are payable in GBP.

Client Clearing Fees

Clearing fees under the SwapClear Client Clearing service are charged to the clearing member under a choice of two pricing plans.

Standard Pricing Plan

The Standard Pricing Plan has an up-front booking fee and an ongoing maintenance fee. In the standard plan both these fee components are volume dependent and may be reduced or eliminated based on cleared volume.

Booking fee:

• New trades are charged on a per-million notional basis in the currency of the trade – see table below
• Incurred at time of trade and collected monthly in arrears
• Further reduced for back-loaded trades through September 9, 2013 (booking fee is one-third of the levels below)

Maintenance fee:

• Assessed annually on the anniversary date of each trade
• Charged on a three-per-million notional basis in the currency of the trade
• Not applied to trades terminated before their anniversary date.
• No maintenance fee applies assuming trade activity falls within plan parameters (Level 1-3)

Volume Discount:

Clients on the Standard Plan can self identify for a volume discount based on the aggregate notional amount expected to be cleared at LCH.Clearnet in 2013. The plan covers all OTC IRS cleared by SwapClear and benefits will apply from the date of enrollment.

Example: Without a discount being applied, a new $100 million 5 year trade would incur a booking fee of $405. At its first anniversary there would be a maintenance fee charge of $300. If the trade is torn up before then, there is no maintenance fee charge.

From Q1 2014 the applicable discount will be based on the prior quarter’s notional activity. The trades from the prior quarter will be annualized and the discount in the table applied. E.g., Based on current notional schedule, a client clears $100Bn in aggregate across three clearing firms in Q2 2014. This represents $400Bn in annual clearing activity meaning that the client will qualify for a 15% discount for all trades cleared in Q3 2104. The discount schedule for 2014 will be released in December 2013 and is subject to regulatory review.

High Turnover Plan

The High Turnover Plan has an up-front booking fee and an on-going “risk consumption” maintenance fee.

Booking fee:

• USD 25 per ticket booking fee for new and backloaded trades (charged upfront)

Maintenance fee:

• The ongoing risk consumption fee is calculated at 10 basis points annualized on the client’s Initial Margin requirement (regardless of type of collateral used to cover IM)
• Calculated daily, paid monthly in arrears – equivalent to $1,000 per $1 million (annualized) of IM

Example: an average IM of $50 million equals an annual risk consumption fee of $50,000.

SwapClear charges all fees to clearing members; members individually make pricing arrangements with clients and confidentially notify SwapClear of the pricing plan for each client. Under the Volume Discount Plan, the client will receive an onboarding form from either LCH.Clearnet or their FCM, and will return the form directly to LCH.Clearnet with the appropriate notional amount selected. Clients can switch pricing plans once per year and only at the end of the month, subject to one month’s advance notice. SwapClear is a service of LCH.Clearnet Limited.