LME Clear creation marks Emir milestone

Author: Gemma Varriale | Published: 17 Sep 2014

A new derivatives clearing house that’s compliant with the European Market Infrastructure Regulation (Emir) is set to become operational for the London Metal Exchange (LME) next week.

Under Europe’s new clearing requirements, all eligible derivatives must be cleared on a central clearinghouse (also known as a central counterparty or CCP).

LME trades over 80% of the world's non-ferrous metal futures and options. Today, these contracts are cleared through LCH.Clearnet, which will be replaced by LME Clear when it launches on September 22.

"All existing clearing houses have to adapt their systems in order to comply with the new requirements," said Michael Thomas, a London-based partner in Hogan Lovells’ financial institutions group. "But LME Clear is the first new entrant that has designed a clearing house as Emir-compliant from the outset."

The most important part...