The London Metal Exchange (LME) launched its new clearinghouse on September 22, planning to introduce renminbi (RMB) as cash collateral later this year.
LME Clear, the new clearinghouse of LME, has migrated all of the positions of LME members from previous clearer LCH.Clearnet Ltd. to its own risk and clearing system, LMEmercury.
"Building LME Clear was an important strategic decision because it not only provides the LME immediate and substantial revenues, but also gives the LME and the group the ability to pursue new markets, new products and new capabilities, particularly in extending the LME franchise to Asian time zones and in adding RMB capabilities," said Charles Li, Chief Executive of LME Clear's parent company, Hong Kong Exchanges and Clearing Ltd., also known as HKEx Group.
The LME is the world's oldest and largest market for industrial metals such as copper and aluminum. It set out to build its own clearinghouse three years ago to take over from LCH.Clearnet, allowing it to collect fees not only for transactions on the exchange, but for clearing them as well.
Expansion in China, which accounts for 40 percent of global copper demand, was another key LME strategy, so LME Clear has moved quickly to allow clients to use the RMB as collateral. |