LME CONSIDERING CHANGES TO CLEARING SYSTEM
A proposal the London Metal Exchange,
LME, change its new clearing system, due to start May 29, was
made today at a meeting of LME members and International
Commodities Clearing House, ICCH, representatives.
    Amalgamated Metal Trading Ltd, AMT, proposed that a daily
cash-cleared system common to all other markets should be
adopted, rather than the system currently planned whereby
prompt dates are settled when they mature.
    AMT claims the margin requirements for the latter will be
costly.
    Opposition to the proposal came mainly from trade and
industry representatives who, as traditional users of the
Exchange's hedging facilities, said a cash-cleared system would
be more costly for them.
    LME Board Chairman Jacques Lion said any major alterations
to the planned new clearing system would have to be referred to
the Securities and Investment Board, SIB, and this could be
time consuming, bearing in mind the May 29 start-up.
    There was also a risk of the Exchange losing its greatest
asset, its trade hedging business, he said.
    Lion accepted a proposal that, while clearing with the ICCH
continue as planned, details of AMT's cash clearing system be
circulated for consideration and discussion by LME Board,
Committee and members for possible introduction at a later
date.
    The LME also said that Japanese yen contracts will now be
excluded from clearing as they are not used widely enough to
warrant inclusion.
 Reuter
