News Column

Canada : ASX lowers fees for interest rate futures clearing participants

July 25, 2014

From 1 October 2014, ASX will lower fees and increase growth incentives for clearing participants in its interest rate futures and over-the-counter (OTC) clearing business. This will be achieved by implementing a new fee schedule for interest rate futures and by providing volume discounts for OTC clearing.

The new fee schedule recognises that volumes have grown strongly and that fees have not changed for more than 10 years. The new fees improve the sustainability of the derivatives business, encourage volume growth and position ASX to compete for liquidity in an evolving global market structure. The fee schedule and growth incentives reflect that customers use exchange-traded and OTC interest rate products together.

Derivatives are the largest contributor to ASX revenue, accounting for $197 million, or 32% of total ASX group revenue, in FY13. Within the derivatives business, interest rate futures account for the majority of traded volume. Australia has both the 5th largest exchange-traded interest rate futures market and the 5th largest OTC interest rate market in the world. The exchange-traded interest rate futures market has grown strongly over the last decade, with notional turnover increasing from $21 trillion in FY05 to more than $41 trillion in FY14 a compound annual growth rate in excess of 7%.

ASX has made significant investments over the last two years to build a world-class financial market infrastructure for the Australian dollar market. The new services flowing from these investments include a clearing solution for OTC derivatives, a client clearing solution that gives important new protections to investors and a collateral management service that provides efficiencies to banks that operate in the Australian market. Each service deploys the best available technology and risk management solutions.

The implementation of a new fee schedule for interest rate futures signals the next phase in the development of ASX sDerivatives business. This phase involves continued investment in ASX s trading, clearing and risk management platforms, the launch of new products that more directly integrate the exchange-traded futures and OTC markets (a process known as futurisation ), and improved alignment between ASX and its clients through lower fees and higher growth incentives. ASX is receiving direct input from clients in its investment program through dedicated risk and product committees.

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Source: TendersInfo (India)

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