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Clearing fees defy logic

Comment: The theory of scale dictating costs has been turned on its head by recent decisions on charges

Clearing – as anyone at any clearing house will tell you – is a scale business. Economies of scale dictate clearing houses should ideally be large and process high volumes of deals. The breadth of the business will help offset and neutralise the risks, while the volumes will afford lower pricing metrics.

Lower clearing volumes mean higher clearing prices, while higher clearing volumes translate into lower clearing costs per unit. Such is accepted wisdom.

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