LME Clear has launched a new triple member margin collateral service designed to simplify and improve collateral management for clearing members.
The service will be provided by Euroclear, which holds more than €41 trillion in assets under custody.
The new model is said to allow members to hold securities with Euroclear and use a single instruction to transfer multiple securities to LME Clear to meet margin requirements.
This is expected to replace the current manual process that requires individual transfers for each security, reducing complexity, costs and settlement risk.
“Offering a triple service will allow members to reduce their operational burdens and make optimal choices about the securities they offer as collateral,” said Barry Gethin, Head of Collateral and Liquidity Services at LME Clear.
Under the tripartite arrangement, Euroclear will manage administration and determine whether securities meet LME Clear eligibility requirements, helping members improve asset utilization and efficiency.
The system will also allow a wide range of securities to be accepted, including US and UK inflation-linked bonds.
Sarah Ciscotti, commercial director for EMEA at Euroclear, said the partnership highlights “the vital role Euroclear plays in supporting clients and other market infrastructure to improve collateral allocation, reduce settlement failures, and reduce credit utilisation.”
LME Clear also announced changes to its offshore renminbi (CNH) cash collateral service from 1 November, including adjustments to the interest paid on CNH to make it a more attractive option for clearing members.