Gold clearing facilitation services
The LME has entered into a joint venture with LCH.Clearnet to offer clearing facilitation services for the London OTC bullion markets. Clearing via a central counterparty such as LCH.Clearnet allows OTC market participants to mitigate counterparty risk.
The existing physical settlement processes of the loco London gold market, via London Precious Metals Clearing Ltd (LPMCL), remains unchanged.
The central counterparty, LCH.Clearnet, will clear loco London gold trades:
- Priced in USD
- With a minimum price fluctuation of USD 0.001
- A weight in multiples of 100 troy ounces
- With daily tenors (excluding London and New York bank holidays) up to a maximum of ten years.
Settlement is by delivery of loco London unallocated gold.
The London Bullion Market Association (LBMA) has appointed the LME to promote, market and distribute its gold forward rates and spot prices at 17.00 UK time. These rates and prices are provided by the LBMA key gold market makers and are used by LCH.clearnet for daily variation margins in the clearing of these OTC transactions.