Acceptable collateral

Collateral acceptable to cover margin liabilities must be highly liquid with low credit and market risk. Collateral will be tiered based upon credit and liquidity standards and the tiering applied will form part of haircut and limit calculations. Non-Cash collateral will be subject to minimum credit standards based upon internal framework and ongoing review. 

Collateral will be regularly assessed in terms of market depth and ability to liquidate within holding period in stressed market conditions. Acceptable collateral must be able to be reliably valued on a daily and intra-day basis with sufficient market data to enable the robust management of market risk. Collateral must be denominated in a currency in which LME Clear contracts or which any FX exposure can be risk managed. Acceptable collateral is subject to a robust and transparent limit, haircut and valuation structure and liquidity based limits related to lodgement and withdrawal.

Acceptable collateral for Default Fund purposes is USD Cash. 

Acceptable collateral for margin cover purposes is as follows:

Cash

  • USD
  • GBP
  • EUR 
  • JPY 
  • CNH

Securities

  • United States 
  • Germany 
  • UK 
  • France 
  • Netherlands 
  • Finland 
  • Japan

Allocated gold bullion 

  • Allocated LBMA Gold

Warrants

Warrants are only acceptable on a metal for metal basis – i.e. Aluminium warrants will be acceptable as collateral to cover Aluminium positions only etc.

  • High Grade Aluminium
  • Copper
  • Lead
  • Nickel
  • Tin
  • Zinc

View more information on Warrants as collateral

Documents

LME Clear publish detailed information about the collateral limit structure employed. This information is available to Member firms who can access the information.