LME Clear’s collateral service allows Members to pledge LME Warrants against their Margin Requirements. This is a unique offering from LME Clear reflecting its status within the global metals market.
The Warrants as Collateral service provides improved efficiency for the LME marketplace, and, in certain circumstances, serves as a natural hedge against cleared positions. Using LME Warrants as Collateral may also allow Members to optimise assets on their balance sheet in a more cost effective manner.
Key points to note
LME Clear accepts Warrants as Collateral for Underlying Metal held in the following warehouse locations:
- Belgium
- England and Wales
- Hong Kong
- Malaysia
- Netherlands (restrictions apply)
- Singapore
- South Korea
- Taiwan
- USA
Warrants of a metal can only be accepted as Collateral against Margin Requirements associated with the Underlying Metal (i.e. aluminium warrants will be acceptable as Collateral to cover aluminium positions) and Members are not permitted to post LME Warrants which relate to Underlying Metal located in their jurisdiction of incorporation unless the Member is incorporated in England and Wales.
Please see the warrants as collateral FAQs for further details. Please also refer to LME Clear's EMIR Article 39(7) disclosure statement, available on the disclosure and transparency page.
Members wishing to post non-cash collateral will be required to sign additional documentation. Certain formalities (including registration of security interests) may apply before non-cash collateral is accepted. LME Clear will only accept non-cash collateral from Members where it is satisfied that the arrangements are enforceable without delay in the event of a member default. Members should note that there may be a lead time to posting Warrants as Collateral due to the need to confirm this for each Member.
Fees for the Warrants as Collateral service are set out in the Group Fees and Charges schedule.