LME Clear, the clearing house of the London Metal Exchange (LME), has announced a new triparty collateral service designed to simplify collateral management and cut operational costs for its clearing members.
The initiative is being supported by Euroclear, one of the world’s largest financial market infrastructures, which holds more than USD 47.8 trillion in assets under custody.
Streamlining collateral transfers through the triparty model
The new arrangement enables clearing members to manage collateral more efficiently when meeting margin requirements. Earlier, it was mandatory to transfer individual securities directly into LME Clear’s collateral account, which also involved significant administrative complexities.
Under the triparty model, members will instead be able to hold securities with Euroclear and issue a single instruction for multiple transfers to LME Clear. All administration will be handled by Euroclear, ensuring that members’ securities are used efficiently and optimised for margin purposes.
The triparty model offers a wider range of eligible assets
The triparty member margin collateral service also broadens the scope of securities that can be used as collateral. From now onwards, Euroclear evaluates whether securities meet LME Clear’s eligibility standards before transferring them to the collateral account. It will also help LME Clear to focus on the right risk parameters.
This enhancement allows LME Clear to accept collateral from nine additional issuers, with US and UK inflation-linked bonds now included as eligible assets when held under Euroclear’s triparty framework.
Read More: LME aluminium slips to USD 2,734/t, is this the start of a deeper decline?
Supporting members’ resource management
Barry Gethin, Head of Collateral and Liquidity Services at LME Clear, said the change will ease the administrative burden on members and improve flexibility.
“We are committed to helping our members make the most efficient use of their resources. The triparty service will not only reduce their operational workload but also expand the range of securities they can use as collateral. This marks another step in enhancing our collateral services for the benefit of the wider marketplace.”
Sara Cescutti, Chief Commercial Officer for EMEA at Euroclear, said the initiative reflects Euroclear’s ongoing commitment to supporting robust market infrastructure.
LME Clear also confirmed changes to how offshore renminbi (CNH) is handled as eligible cash collateral. From 1st November 2025, revised interest terms will make CNH a more attractive option for clearing members, reflecting a renewed focus on this part of its collateral offering.
Read More: LME’s new pricing framework for sustainable metals sparks market intrigue
Responses
