Download working examples of LMEmini initial margining.
LMEminis will appeal to market participants who wish to trade monthly contracts that are not physically deliverable, with smaller tonnages, via an electronic trading platform or the telephone market.
Such interested parties would be: LME members, hedge funds, CTAs, arcades, Independent Software Vendors (ISVs), proprietary houses, retail investors, day traders, small professional traders, large professional traders and funds.
LMEminis will also be attractive to the physical metals industry, particularly those looking to trade smaller tonnages than the standard LME contracts or a simple monthly prompt date system.
For LME parent metal contracts, profits are not immediately realised but become due only on the prompt date of the contracts, and discounted to present value, whilst unrealised losses have to paid up whilst the LME parent metal contract positions are open.
For LMEmini contracts, variation margins are realised each day unlike the parent metal contracts. Daily variation margin payments and receipts are debited or credited to the clearing members' accounts during the life of the open LMEmini position. The LMEmini variation margins are therefore not discounted.
Initial margins are set by LME Clear in agreement with LME. LME Clear uses London SPAN methodology for its margining. An LME member may, however, charge a different initial margin to its clients than LME Clear requires from its members.
Click below for more information on LME Clear.