The LME Clear Disclosure can be found here:
LME Clear CPSS-IOSCO Disclosure Document 2022 (PDF)
This includes information about:
Types and treatment of accounts
Details the types of account available at LME Clear and how they are operated.
Calculating and maintaining margin
The margin requirement for each member is the amount which LME Clear determines and notifies the member of, from time to time. At present, a member's margin requirement will be calculated, maintained and applied to each account on a net basis.
Members' counterparty risk on LME Clear
Where a member provides cash to LME Clear, whether as collateral or default fund contributions, general legal principles and the contractual arrangements provided by the rules mean that ownership in that cash is transferred to LME Clear. The member has no title or interest in the cash and instead the member is owed a corresponding debt by LME Clear.
LME Clear Rule 10 and the default procedures constitute the default rules of LME Clear for the purposes of:
- Part VII of the Companies Act 1989
- the recognition regulations
- the settlement finality regulations
- UK EMIR
Porting - Details on how client accounts may be transferred from a defaulting member to another member following a default.
The rules provide for the transfer of client accounts to another member following a member default. This is in accordance with UK EMIR.
Implications of applicable insolvency law
Keeping all the accounts of one member separate from those of other members allows transactions between LME Clear and the member, and the collateral provided by members to support those transactions, to be dealt with separately from those of other members should LME Clear or the member enter into insolvency proceedings.
Clients' insolvency exposure to members and other clients
Members are organised in a number of different jurisdictions and LME Clear cannot comment on how insolvency procedures in each member's home jurisdiction or elsewhere will function.
LME Clear permits members to establish client accounts in respect of indirect clients (that is, the clients of the member's own clients). Each such account will be a form of an ISA that the member maintains in respect of the single client that has the relationship with the underlying indirect client(s).