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LME clearing home unveils reforms, to triple member capital requirements

The London Metal Exchange's. clearing home proposed reforms on Thursday to improve stability. including tripling the capital requirements for members.

The exchange, the world's oldest and biggest market for. commercial metals, likewise said in a statement that LME Clear would. lower the amount members need to contribute towards its default. fund.

These are the most recent set of propositions designed to increase. openness, predictability and total strength for clearing. members and market individuals more broadly, stated LME Clear. CEO Michael Carty.

A consultation will be held until Dec. 16 on the proposals,. which would increase the minimum net capital requirement for. members to $30 million from $10 million.

This proposition ... (would) reassure market stakeholders of. the resilience of LME Clear markets, the declaration said.

LME Clear would move towards a so-called defaulter pays. design and introduce a ceiling to its default fund, which. would restrict the amount paid by clearing members, it included.

The clearing home likewise plans to present new approach. to restrict the percentage by which the default fund can fall in. any one re-calculation, making contributions more steady.

In March 2022, the LME said it had to cancel $12 billion in. nickel trades when rates increased because a record $20. billion in margin calls might have caused at least seven. clearing members defaulting.

The LME is owned by Hong Kong Exchanges and Clearing Ltd.

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(source: Reuters)