ClearPar fees are charges associated with the settlement of loan trades facilitated through ClearPar, a platform owned by London-based Markit Group Ltd. These fees are specifically for clearing a trade on their system.
Understanding ClearPar
ClearPar serves as a crucial service in the financial industry, particularly for the syndicated loan market. Its primary function is to standardize and streamline the process of settling loan transactions, which often involves complex administrative tasks and multiple parties. By providing a centralized platform, ClearPar aims to enhance efficiency, reduce operational risks, and accelerate the completion of loan assignments and participations.
ClearPar Fee Structure and History
Historically, ClearPar's services were offered without charge to investors for a significant period. However, this policy changed, leading to the introduction of settlement fees, which have since seen adjustments.
Here's a breakdown of the fee changes:
| Period | Fee Per Trade | Notes |
|---|---|---|
| Founding (Over 10 years prior to Oct 2011) | Free | Transactions were free to investors. |
| Starting October 3, 2011 | $30 | ClearPar began charging for trade settlement. |
| Starting December 1, 2011 | $19 | Fee was lowered due to market resistance. |
This fee adjustment in late 2011 highlights the platform's response to feedback from traders regarding the initial charge. The reduction aimed to balance the operational costs of providing the service with the market's willingness to pay for it.
Purpose of the Fees
The fees charged by ClearPar are designed to cover the costs associated with maintaining and enhancing the platform, including:
- Technology Infrastructure: Ensuring a robust and secure system for processing sensitive financial transactions.
- Operational Support: Staffing and resources required to facilitate and oversee the settlement process.
- Continuous Development: Investing in new features and improvements to meet the evolving needs of the loan market.
By charging a per-trade fee, ClearPar ensures the sustainability of its service, which plays a vital role in the efficient functioning of the syndicated loan market by standardizing and automating what can otherwise be a time-consuming and complex settlement process.
