Introduction of clearing of Cobalt and Roasted Molybdenum Concentrate futures contracts on the

London Metal Exchange 

The London Metal Exchange Limited (LME) and LCH.Clearnet Ltd (LCH.Clearnet) are currently preparing for the launch of Cobalt and Roasted Molybdenum Concentrate futures contracts. This circular provides information about the new contracts, and includes:

• Launch Information

• Systems used for Clearing and Delivery

• Valid Prompt Dates

• Minor metals Contract Codes

• Trade Suspension

• Clearing Procedures

• PPS and Banking Procedures

• Margin Methodology

• London SPAN Parameters

• PC Bridge

• Fees
  

Launch Information

The launch of the two minor metals contracts will take place on Monday, 22 February 2010.

Systems used for Clearing and Delivery

Trades from LMEsmart will be fed to the LME Matching and Clearing System (MCS). Clearing of the new minor metals futures contracts will utilise MCS in the same way as other LME non-ferrous, ferrous and plastics contracts.
Minor metals contracts are physically delivered and title will be transferred via LMEsword.

Valid Prompt Dates

On Monday 22 February 2010, the first tradable prompt date will be the three month date, Friday, 21 May 2010, and the last prompt date will be the fifteen-month third Wednesday date, 18 May 2011. Trading for settlement in two business day’s time (Cash) will be allowed from Wednesday, 19 May 2010. 

Trade Suspension

The traded price and lot size of minor metals trades presented to LCH.Clearnet for registration are validated against a price range and lots limit file. The lots limit is presently set at 1500 futures lots for all contracts. The price limit is set to be identical to the prevailing scanning range for each contract.

Clearing Procedures

These contracts will be processed by MCS in the same way as existing LME non-ferrous and ferrous metals and plastics contracts.

PPS and Banking Procedures

Standard LCH.Clearnet PPS and banking procedures will apply to these contracts. If you have any queries regarding PPS arrangements please contact Siobhan White on +44 (0)20 7426 7044 or [email protected].

Margin Methodology

Contracts will be margined using London SPAN in the same way as all other LME contracts. Details of all margin obligations will be included in the same MCS reports as for all existing products. Also all margins will be posted to the LCH.Clearnet Banking system and details will be included in all the usual Banking reports and screens.

London SPAN Parameters

LCH.Clearnet will publish margin rates for the new contracts in a separate circular. Details will be found under the ‘Margin information’/ ‘LCH.Clearnet Ltd Margin Rate Circulars’/LME section.

PC Bridge

There is no new release of PC Bridge. Version 4.4-0 of PC Bridge is still current. Please remember to set the filter to retrieve “All Commodities” to access the Futures Closing Prices Filter maintenance screen and the new contracts.

If you require assistance please contact LCH.Clearnet Service Desk on 020 7426 7200 or email them at [email protected].

Fees

The registration and delivery fees for these contracts are the same as for non-ferrous and ferrous metals and plastics, namely: 

All fees are per lot per side.

There will be a fee holiday from the first day of trading until the end of the year (31 December 2010).

Miscellaneous

Questions relating to the topics covered in this circular should be directed to the following:

Yours sincerely

David Farrar
Director, Head of Commodities and Metals
Commercial Services