LME Clear opens for business
The LME has launched a clearing house
The London Metal Exchange has launched its new clearinghouse LME Clear, an important plank of the exchange’s heightened ambitions following its acquisition by Hong Kong Exchanges and Clearing at the beginning of 2013.
The technology behind LME Clear was built by Cinnober with assistance from Swedish quant firm Algorithmica Research, which provided guidance on risk management. LME Clear uses a system called LMEmercury, which operates in real time and is designed to provide a clear view of aggregated cash positions at any moment in time.
“In today’s clearing environment, regulatory, market and client demands emphasize the need for high-performance systems, in terms of resilience, processing ability and the move to real-time risk management, and our partnership with Cinnober has enabled us to deliver this capability,” said Trevor Spanner, chief executive at LME Clear.
Cinnober has recently worked with several other exchanges, including Brazil’s BM&F Bovespa, and South Africa’s Johannesburg Stock Exchange. The technology vendor claims that real time capabilities are now becoming essential in capital market infrastructure projects.
“What is emerging is a paradigm shift: in the future the financial industry will look back on this period and talk about before and after real-time clearing,” said Veronica Augustsson, chief executive at Cinnober.
Earlier this year, the LME began work with Colt to set up a new dedicated network interconnecting all its systems including the LME Clear clearing service. Called LMEnet, the network will use Colt’s trading network service PrizmNet and will offer three tiers of connectivity, based on performance and latency requirements. LMEnet will also use Colt’s new service management tool, designed to help users monitor latency and bandwidth use. The LME expects to move users to the new system within nine months of the technology being installed. The first migrations are expected in October.
HKEx is hoping the LME can act as a doorway for it to capitalise on the internationalisation of the Chinese renminbi. London has become a major offshore centre of RMB trading activity, while around a quarter of the volume traded on the LME is Asian.
