LME Clear, the clearing house for the London Metal Exchange (LME) market, on Monday announced the successful rollout of two new services: trade compression and the ability to post metals warrants as collateral.
The new trade-compression service enables members to cut the notional value of their positions and simplify their portfolio management. It also enables them to offset multiple trades that have compatible characteristics into a single trade, or reduce the trades to a net zero position, without changing the risk profile of their portfolio.
Thanks to the acceptance of metal warrants as collateral, market participants are able to place their metals ownership documents against their trading positions as part of the clearing process, providing the LME market with a new way of protection against risk.
Trevor Spanner, CEO of LME Clear, said,
“We are delighted to be offering these two new services. 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.”
The introduction of the new services was timed to coincide with an upgrade of LME Clear’s real-time clearing system, LMEmercury, which completed successfully on November 23, 2015.
You can view the announcement from LME by clicking here.