LCH.Clearnet accepts gold as collateral
30 August 2012 London
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LCH.Clearnet began accepting unallocated gold (Loco London) as collateral for margin cover purposes on 28 August.
The expansion of LCH.Clearnet’s existing collateral range is subject to criteria including daily valuation, with an initial haircut of 14 percent applied.
A LCH.Clearnet circular to clearing members added that concentration limits also apply, including a “maximum lodgement limit per member group of USD 200m (currently approximately 130,000 troy ounces)”.
“LCH.Clearnet will make an accommodation charge of 20 basis points on utilised collateral amounts based upon member defined usage ordering rules. Costs incurred from the custodian will be passed on to clearing members on a pro rata basis and based on the value of the collateral lodged.” Earlier this year, LCH.Clearnet began accepting Ginnie Mae mortgage-backed securities (GNMA MBS) to widen its range of existing collateral types.
Accepting new collateral types such as GNMA MBS is an aim of LCH.Clearnet’s collateral and liquidity management (CaLM) group. It wants to offer clients a more efficient, centralised collateral management service.
In a recent statement, Andrew Howat, head of CaLM at LCH.Clearnet, said: “This addition to our range of acceptable collateral reinforces our strategy to maintain the highest standards of risk management, whilst demonstrating our ongoing commitment to developing our business offering, both in the US, and for our buy side clients.”
The expansion of LCH.Clearnet’s existing collateral range is subject to criteria including daily valuation, with an initial haircut of 14 percent applied.
A LCH.Clearnet circular to clearing members added that concentration limits also apply, including a “maximum lodgement limit per member group of USD 200m (currently approximately 130,000 troy ounces)”.
“LCH.Clearnet will make an accommodation charge of 20 basis points on utilised collateral amounts based upon member defined usage ordering rules. Costs incurred from the custodian will be passed on to clearing members on a pro rata basis and based on the value of the collateral lodged.” Earlier this year, LCH.Clearnet began accepting Ginnie Mae mortgage-backed securities (GNMA MBS) to widen its range of existing collateral types.
Accepting new collateral types such as GNMA MBS is an aim of LCH.Clearnet’s collateral and liquidity management (CaLM) group. It wants to offer clients a more efficient, centralised collateral management service.
In a recent statement, Andrew Howat, head of CaLM at LCH.Clearnet, said: “This addition to our range of acceptable collateral reinforces our strategy to maintain the highest standards of risk management, whilst demonstrating our ongoing commitment to developing our business offering, both in the US, and for our buy side clients.”
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