LCH.Clearnet Limited (LCH.Clearnet), the leading independent clearing house, will begin clearing minor metals for the London Metal Exchange (LME), the world’s premier metals and industrial materials exchange, on 22 February 2010.
LCH.Clearnet will provide clearing services for futures contracts traded on the LME in cobalt and molybdenum. The initiative will bring greater risk protection to the minor metals market, increasing transparency and liquidity, providing anonymous post-trade processing and allowing market participants to effectively manage their counterparty exposure.
Cobalt and molybdenum are both key industry metals. Molybdenum production is around 190,000 tonnes a year, with a value of $4.8 billion, while cobalt weighs in at 55,000 tonnes and around $1.9 billion.
David Farrar, director of Commodities and Metals, LCH.Clearnet said: “We are proud to be working with the LME on this new initiative. Cobalt and molybdenum are both by-products of metals already cleared at LCH.Clearnet and, as the leading clearer of commodities in Europe, this is a natural extension to the existing clearing services we provide to market participants.”
Martin Abbott, chief executive, LME said: “The launch of minor metals contracts on the LME is a major strategic move to broaden our metals portfolio and we are delighted that LCH.Clearnet is partnering with us on this initiative. Cobalt and molybdenum industry participants will benefit from real price discovery, the ability to finance inventories and the ability to hedge their price risk. The connection to LCH.Clearnet provides the market with all the proven advantages of central counterparty clearing.”