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14th July 2020 | Article

ETD clearing fees on the rise while revenues rebound

Latest Acuiti survey finds some FCMs are raising fees for clearing exchange traded derivatives as risk is repriced and rates turn negative.

London — 15 July

Some FCMs are raising fees for exchange traded derivatives clearing, bucking a long-standing trend towards declining prices and reflecting a new normal in derivatives markets.

The latest Acuiti Insight survey, a monthly barometer of industry performance and operational change, found that 30% of FCM respondents reported increasing fees over the past six months, the first time widespread fee rises had been reported.

“Some FCMs appear to be repricing derivatives clearing across most if not all clients as they seek to maintain margins in the face of lower or, in some instances, negative rates,” said Will Mitting, managing director of Acuiti.

“In addition, there is an industry-wide reappraisal of the cost of risk following the unprecedented volatility during February and March. While FCMs on the whole benefitted from the higher volumes during the market volatility, the numerous margin breaches experienced across the market highlighted the risk that they are exposed to.”

The survey also found that brokerages are facing significant downward pressure from clients on execution fees for listed derivatives. This trend threatens to further squeeze margins if these firms also face increased clearing costs.

Revenues return to form

Revenues for the month across the market picked up in June after two subdued months as volatility fell back across global markets.

Improved revenue growth was reported across all regions. However, growth in the US lagged behind other regions. European equity options trading firms experienced a particularly strong month compared with their peers elsewhere.

The monthly Acuiti Derivatives Insight Report is compiled from submissions from Acuiti’s network of over 550 senior executives in the global derivatives markets.

To apply to join the Acuiti network and get the opportunity to take part in and receive a free copy of the Acuiti Derivatives Insight Report, visit acuiti.io

 

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For more information, contact Will Mitting

Tel.: +44 (0) 203 998 9190

Email: willmitting@acuiti.io

 

About Acuiti

Acuiti is a management intelligence platform designed to provide senior executives with unparalleled insight into business operations and industry-wide performance. Acuiti helps identify market trends, enhance decision-making and benchmark company performance. The platform anonymises and aggregates information from its exclusive network of senior industry figures to provide insightful in-depth analysis.