As reported by FOW, on May 1 ICE changed the clearing and execution fees on Liffe by slashing the cost of execution and hiking the cost of clearing.

The overall cost of 28p has been maintained but the headline clearing fees have gone up from 3p to 20p and the headline trading fee cut from 25p to 8p.

Arguments of what was behind the move have focused on potential tax efficiencies to the need to move budgets around.

But on the face of it there doesn’t seem to be any tax benefits from the move and the need to shift budgets seems unlikely considering ICE has just shelled out billions of dollars for Liffe.

Another possibility is that it constitutes a defensive move against upcoming legislation to open up clearing houses.

Mifid II will (possibly, eventually, and in some form) mandate CCPs to provide open access to execution platforms, probably mandating cross margining between economically identical products.

ICE has not commented on the fee changes and “the Mifid II defence” might simply be a consequence of its actions rather than the root cause but the new fee structure will make it very, very difficult for any execution venue to compete in an open access environment.

Imagine you are an MTF offering say FTSE 100 futures and you wanted to take advantage of open access by clearing within ICE Clear Europe’s clearing pool offsetting against positions on Liffe.

With clearing fees at 3p, you can drop your headline trading fees to 15p, under-cut Liffe and still turn a decent profit.

However, with the clearing fees at 20p, all going to ICE, you only have 8p to undercut on the execution side. A few pennies won’t make it attractive enough for firms to invest in a new platform.

So while the overall cost of trading and clearing on Liffe has been maintained by the fee change, the ability to launch competition in an open access environment has been curtailed. Near irrelevant today but possibly game-changing in a post-Mifid II world.