LCH.Clearnet Limited (LCH.Clearnet), the leading over-the-counter (OTC) clearing house, is set to launch clearing for the wholesale OTC London bullion market. The service will be introduced by April 2010.
London is the international hub for the bullion OTC market with trading conducted by members of the London Bullion Market Association (LBMA). Members include major international banks, brokers, fabricators, transport companies and refiners. The London bullion market is a wholesale market where minimum traded amounts are generally 1,000 ounces of gold and 50,000 ounces of silver.
Introducing clearing to the wholesale bullion market will help reduce systemic risk, improve market transparency and improve operational efficiencies. Initially clearing will be available for gold forwards and options for value dates from spot out to 5 years. This will be followed by Silver, Platinum and Palladium and will be priced in US$.
LCH.Clearnet has unique expertise in clearing a wide range of OTC derivatives including Freight (FFAs), Interest rate swaps, Fixed Income repo and cash markets, energy and emissions.
Roger Liddell,Chief Executive LCH.Clearnet said "Clearing and the management of the risks associated with forward bullion trades will underpin the future growth of the bullion market. The service has been designed to complement the current practices in London in order to minimise disruption to market participants whilst delivering the benefits that centralised clearing brings."