SIS Segaintersettle, the Swiss central securities depository, has cut fees for inhouse settlement of all global securities by 90%. Settlement for transactions involving international securities now costs CHF 0.9 (E0.56) per transaction opposed to CHF10 previously. To benefit, both sell and buy sides need to have an account at SIS.
SIS says the move is in response to demands from the international securities industry for a cost-effective, transparent and efficient settlement system. It’s also due to economies of scale. When SIS launched 12 years ago, it had very few inhouse clients, now it has sufficient numbers to warrant the cuts.
Ronny Vogt, SIS’s spokesman, says the new tariffs are unrivalled by other settlement organisations. He hopes they will attract further clients but refuses to specify a target. “The environment we’re living in is changing very quickly, it’s impossible to predict what will happen in the next two or three months,” he says
Alfred Frei, senior vice president at Pictet in Zurich, says the lower rates will likely increase turnover “If the trader sees Switzerland as a cheap market, he’s less afraid to turn around a security a few times.” He doubts that they will attract new accounts: “Although it sounds big in percentage terms, what’s a nine franc saving on a ticket of 100,000 francs,” he says.
Frei says Segaintersettle compare themselves to the American market where clearing costs a few cents. “It’s always argued that the European market is too expensive,” he says. The new tariffs apply to over 60,000 securities including all globally traded blue chips in 43 markets. At present 600 domestic and foreign clients settle their securities transactions using SIS and the new tariffs will apply to about 800,000, or 5% of annual trades.
SIS believes the move paves the way for a pan-European electronic trading system for blue chips. Last March SIS began a joint venture with CrestCo, the British settlement organisation, to launch its Settlement Network which delivers a single integrated process for cross border settlement in Europe. “The next step will be integrated settlement of an electronic, European blue chip exchange,” says Heinz Haeberli, the chief executive of SIS.
The SIS board has also decided to cut prices of domestic and cross border transactions. Trades completed at the SWX Swiss exchange will cost CHF 0.4 to settle, rather than CHF 0.55 previously.