LCH. Clearnet, Europe's largest independent clearing house, has reported a net loss for last year due to a fall in exchange trading volumes, highlighting the increasing competitiveness of the post-trade business.
The loss reported by the firm was €91m (£79m), compared with a record profit of €219.8m after tax last year.
Though Europe's clearing houses have been able to avoid regulatory moves to open up their competition till now, yet LCH's performance has shown that it’s still vulnerable in terms of increased rivalry among its client exchanges and new trading venues.
Roger Liddell, group Chief Executive, in a statement on Tuesday, said, "In cash equities we have responded to an increase in competition by reducing our fees, most notably in LCH. Clearnet SA. Due to the impact of these tariff reductions on future revenues, we have recognised an impairment charge of 393.4 million Euros”.
According to the company, "revised volume growth assumptions" can also be blamed for the impairment, which converted an operating profit of 423 million Euros into the net loss, which includes a tax bill of 121.4 million.