LME Clear brings trade compression and collateralised warrants online

Source: London Metal Exchange

LME Clear, the clearing house for the London Metal Exchange (LME) market, today announces the successful launch of two new services: trade compression and the ability to post metals warrants as collateral.

“We are delighted to be offering these two new services,” says Trevor Spanner, CEO of LME Clear. “As a new clearing house, LME Clear is in a great position to innovate and keep pace with change, and the launch of these services shows LME Clear understands the unique and particular workings of our market.”

LME Clear is the first clearing house ever to accept warrants as collateral. Market participants are now able to place their metals ownership documents against their trading positions as part of the clearing process, giving the LME market a new source of protection against risk.

With the launch of the trade-compression service, members now have the opportunity to reduce the notional value of their positions and simplify their portfolio management. The new post-trade, risk-neutral system allows members to offset multiple trades that have compatible characteristics into a single trade, or reduce the trades to a net zero position, without altering the risk profile of their portfolio. One member has already reduced their notional by 90%.

The launch of the new services was timed to coincide with an upgrade of LME Clear’s real-time clearing system, LMEmercury, which completed successfully on 23 November.

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