13 August 2014
LME Clear, the new clearing house for the London Metal Exchange (LME) market, has received a designation order made by the Bank of England under the Financial Markets and Insolvency (Settlement Finality) Regulations 1999.
The designation relates to LME Clear’s secure payment system, which covers payment activities regarding 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 clearing Members, clients and LME Clear.
The designation order, which came into effect on 8 August 2014, reduces systemic risk for LME Clear Members, offering enhanced protection against the adverse operation of European insolvency laws in the event of a counterparty default. Under the Settlement Finality Directive, collateral and payment instructions are better protected from administrators or liquidators of insolvent firms.
“The Bank’s designation marks another major milestone for LME Clear in its preparation for launch on 22 September, and demonstrates our commitment to building an EMIR-compliant, robust and safe clearing house” said Trevor Spanner, CEO of LME Clear.
Designed and built in consultation with the LME’s members, LME Clear is scheduled for launch on 22 September. The clearing house will initially clear all trades on the LME and those matched on the OTC matching service.
For further information or to speak to an LME spokesperson, please contact:
Tel: +44 (0)207 113 8538
Tel: +44 (0)207 113 8534
The London Metal Exchange, a member of HKEX Group, is the world centre for industrial metals trading.
The majority of global non-ferrous metals business is conducted on our three trading platforms: LMEselect (electronic), the Ring (open outcry) and the 24-hour telephone market. The world’s metal community uses the LME to trade futures and options, and to hedge against adverse price movements. Prices that are discovered on our markets are used as the global reference prices.
Participants can trade aluminium, aluminium alloy, copper, tin, nickel, zinc, lead, molybdenum, cobalt, steel rebar and steel scrap, and four regional aluminium premiums contracts. In 2016, 156.5 million lots were traded on the LME, the equivalent of 3.5 billion tonnes and $10.3 trillion in notional value.
At the close of the year, approximately 3.6 million tonnes of material was held on LME warrant in more than 600 storage facilities across 34 locations internationally.