Equities trading costs under pressure Costs for finalising equities trades are coming under renewed pressure after one of the region's at-cost clearing houses said its market share had grown due to brokers keen to cut overall trading costs. EuroCCP, a London-based clearing house largely governed by its users, said it had cleared an average 3m sides per day in January, which would equal to around 25 per cent of Europe's daily average volume. That is compared with a market share of around six per cent last year, based on statistics from the Federation of European Securities Exchanges. Its rising market share has come in the wake of new clearing arrangements a month ago from Chi-X Europe, the region's largest share trading platform. A clearing house, also known as a central counterparty (CCP), stands between two parties to guarantee a trade is completed if one party defaults. Chi-X Europe has allowed users a choice of clearing house, and EuroCCP says it has taken 40 per cent of the venue's volume. The dramatic shift in market share for clearing equities in the last month has illustrated the extent to which banks and brokers, facing lower profitability and tougher capital rules, are looking at costs by analysing all aspects of trading. Critics have argued that clearing and settlement costs in Europe have been kept high by more than 20 clearing houses, few of which allowed access to rivals. Chi-X Europe, owned by US group BATS Global Markets, has been the largest of several of Europe's alternative trading venues pushing to free-up access to other clearing houses, a push known as "interoperability." By keeping their trading flow in one CCP, investors can cut costs. Shifting market shares among clearing houses also sets up the prospect of a price war on fees, which have remained more static even as the emergence of alternative trading venues has slashed costs for trading and clearing. European Multilateral Clearing Facility, Europe's largest cash equity clearing house, is planning to cut settlement charges in Dutch, French, Swiss, UK and Irish markets from March. BofA Merrill Lynch, Credit Suisse, Morgan Stanley and Nomura are among banks to have switched their flow to EuroCCP, which is owned by Depository Trust & Clearing Corp of the US. "Firms that move are making a statement on their preferred market structure," said Diana Chan, chief executive of EuroCCP. They are showing the choice [of clearing house] they want to have available in the future. National regulators blessed the first interoperability agreements last year, allowing a host of European trading venues and clearing houses to press ahead. Among the other institutions signing up to the push include Nasdaq OMX, Turquoise and UBS MTF, x-Clear of Switzerland and the UK's LCH.