London Metal Exchange to add RMB in new clearing system

The London Metal Exchange (LME) launched its new clearing house on Monday, planning to introduce renminbi as cash collateral later this year.

LME Clear, the new clearing house of LME, 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 renminbi capabilities," said Charles Li, chief executive of LME Clear's parent company, Hong Kong Exchanges and Clearing Limited.

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 clearing house 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.

Expansion in China, which accounts for 40 percent of global copper demand, was another key LME strategy, so LME Clear was moving quickly to allow clients to use the renminbi as collateral.

LMEmercury enabled members to view their risk positions in real time, offering straight-through processing, integrated collateral management and a range of comprehensive reports. It also featured enhanced option expiry handling.