LME Clear to Launch in September as it Gains CCP Status with ESMA

The London Metal Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term’s (LME) clearing and settlement division, LME Clear, has been approved by European regulatory authorities as a Central Counterparty, the firm joining the growing list of firms. LME Clear became the twelfth firm to gain membership.

The move highlights ESMA’s commitment to ensuring global financial markets operate in an efficient and transparent manner. LME Clear also reported that it will launch later this month after receiving approval from the UK’s central bank.

Regulations in financial markets have been changing across developed markets after governments and leaders outlined OTC derivatives transactions as the culprit behind the downfall of the economy six years ago.

Amendments to rules and guidelines have been drawn from the Committee on Payment and Settlement Systems and the International Organization of Securities Commissions (CPSS-IOSCO Principles), an organisation that serves as a global benchmark for regulatory requirements for central counterparties (CCPs).

“This is exciting news for LME Clear. Authorisation means that our Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term framework, governance, capital, client account structures and operating model all meet the high standards required under EMIR,” said Trevor Spanner, CEO of LME Clear, in a statement.

The pre and post-trade obligations of OTC derivatives came into question during the 2008 recession. LME Clear will offer a number of mechanisms that aim to reduce risks associated with transactions.

Prior to clearing trades, the firm’s matching portal, LMEsmart, will match all trades to confirm details of the trades. LME Clear, which replaces LCH Clearnet at the global metal exchange will then engage in the process of registration and novation.

LME Clear enhances the Hong Kong-owned venues position as a multi-asset, multi-lateral provider of financial services to participants.

Charles Li, HKEx Chief Executive, added: “Authorisation is a key step towards launch. LME Clear gives us greater control of our destiny – particularly with regard to the speed and flexibility of product launches.”