08 OCTOBER 2012Platts
London Clearing house to reduce LME metals margin rates
Edited by : AL CIRCLE
1 min read
London Clearing house LCH.Clearnet is reducing its margin rates for the London Metal Exchange's copper, primary aluminium, aluminium alloy, North American alloy, nickel, lead, zinc and molybdenum contracts, effective September 7, LCH said Tuesday.
The rate covers the market risk the clearing house takes on when it accepts trades for clearing and reflects the extent of any losses a contract might show. Margin rates typically rise during increased market volatility.
Basic inputs to the LCH calculations of initial margins are the so-called "scanning range" and the volatility change for options.
After consultation with the LME, the scanning range for copper will be reduced to $580/mt from $630/mt; for primary aluminium to $130/mt from $142/mt; for aluminium alloy to $110/mt from $120/mt; for North American alloy to $110/mt from $120/mt; for lead to $200/mt from $225/mt; for zinc to $175/mt from $185/mt; and for molybdenum to $2,500/mt from $3,000/mt.
Margin rates on the other LME contracts remain unchanged.
The changes will be effective from the close of business September 7 and will be reflected in margin calls on September 10.
The rate covers the market risk the clearing house takes on when it accepts trades for clearing and reflects the extent of any losses a contract might show. Margin rates typically rise during increased market volatility.
Basic inputs to the LCH calculations of initial margins are the so-called "scanning range" and the volatility change for options.
After consultation with the LME, the scanning range for copper will be reduced to $580/mt from $630/mt; for primary aluminium to $130/mt from $142/mt; for aluminium alloy to $110/mt from $120/mt; for North American alloy to $110/mt from $120/mt; for lead to $200/mt from $225/mt; for zinc to $175/mt from $185/mt; and for molybdenum to $2,500/mt from $3,000/mt.
Margin rates on the other LME contracts remain unchanged.
The changes will be effective from the close of business September 7 and will be reflected in margin calls on September 10.
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