LME Clear’s Secure Payment System (SPS) covers payment activities relating to the collection, processing and return of cash and collateral between LME Clear members and the clearing house. All transfers, subject to certain conditions, are deemed final and therefore irrevocable, protecting both clearing members, clients and LME Clear.
LME Clear has received Settlement Finality designation by the Bank of England under the Financial Markets and Insolvency (Settlement Finality) Regulations 1999.
The designation order, which came into effect on 8 August 2014, reduces systemic risk for LME Clear Members, offering enhanced protection in the event of a counterparty default. Under the Settlement Finality Directive (SFD), collateral and payment instructions are protected from administrators or liquidators of insolvent firms.
Settlement Bank Eligibility Criteria
Institutions offering Settlement Bank services within SPS
Those institutions offering Settlement Bank services within SPS are listed below:
- The Bank of New York Mellon
- Bank of China Limited
- Barclays Bank PLC
- BMO Harris Bank N.A.*
- Citibank N.A.
- Commerzbank AG*
- Deutsche Bank AG
- HSBC Bank Hong Kong**
- HSBC Bank PLC
- HSBC Bank USA NA
- J.P. Morgan Chase Bank N.A.
- Lloyds Bank PLC
* Only acts as a SPS Bank for late US dollars margin calls
** Only acts as a SPS Bank for renminbi
Institutions offering Settlement Bank services within SPS
Those institutions offering Settlement Bank services for themselves only:
- Standard Chartered Bank
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