The LME first announced proposals to build its own clearing house in May last year, replacing the incumbent supplier LCH.Clearnet.

The Exchange says it has now narrowed down its search for a software supplier for the new platform to a shoot-out between Calypso and Cinnober. The next stage of the project entails a "design study" to determine which of the two vendors offers the best fit.

In the interim, the LME plans to move LME Clear staff into dedicated offices close to the main premises in Q3 2012.

"As the clearing project progresses the team is growing, which means we will need a larger space to accommodate new joiners," says Trevor Spanner, MD of post trade services at the LME. "The new offices are being prepared and will accommodate a minimum of 40 project and full-time staff."

Profits at the LME fell 19% last year, as higher costs and investments outweighed a rise in trading volumes. The results come as three major exchanges - CME Group, Hong Kong Exchanges and Clearing Limited and Intercontinental Exchange - compete to buy the 135-year old metals market.

A successful takeover may upset the Exchange's plans to proceed with its own clearing project - the LME has yet to serve notice on LCH.Clearnet as it awaits the outcome of the bidding and full board approval for the two-year project.