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LME self clearing

On 3 May 2011 the LME announced that it is giving serious consideration to building its own clearing house and has entered a period of engagement and consultation with shareholders, members and other stakeholders before a final decision is made.

The LME has published a set of freqently asked questions (FAQs) to further inform users of the exchange on the recent announcement. Members and shareholders with questions are encouraged to contact the LME to discuss the feasibility study.
Self clearing FAQs

Why is the LME considering creating its own clearing house?
How much will the creation of an LME clearing house cost LME clearing members and shareholders?
What will be the fees of the LME’s clearing house?
Will a separate LME default fund require additional contributions from clearing members?
Is the LME capable of delivering a new clearing house?
Is clearing being considered to increase the value of the LME prior to a planned sale?
Is the LME considering partnering with ICE Clear, CME Clear or others?
Members have just invested in back office upgrades for Synapse. Will the LME’s clearing house require a similar investment from clearing members?
Will members lose any cross-market margin benefits?
Where will an LME clearing house fit into the LME’s governance structure?
How will members be consulted during the implementation of an LME?
How long will it take to build and implement an LME owned and operated clearing house?
Are systems available that meet the needs of an LME clearing house?
Can a stand alone LME CCP compete on costs, service or counterparty credit risk with a clearing house dealing with multiple asset classes?
What are the proposed capital, insurance and members default fund structures and the levels and value of coverage against any member default ?
How will the LME’s clearing house differ from that of LCH.Clearnet?
Will the lack of risk diversification caused by a single exchange, single CCP model class create extra risk for the market?
What benefits will shareholders and clearing members receive from an LME owned clearing house?
Is it proposed that margin requirements can be covered by a broad range of currencies and collateral including physical material, government and corporate debt and financial institution guarantees?
 
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