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| Originating department: | Commercial Services |
| Company Circular No: | LCH.Clearnet Ltd Circular No 2735 |
| Service Circular No: | LCH EnClear No 314 |
| Date: | 24 November 2010 |
| To: | All LCH.Clearnet EnClear Clearing Members |
Extension of LCH EnClear OTC Clearing Service to two additional Steel contracts
LCH.Clearnet is pleased to announce that it will be extending its OTC Clearing service for Steel swaps to cover two further contracts- a Turkish Import scrap contract and a Chinese Hot Rolled Ribbed Bar contract. The new contracts will be available for clearing from Wednesday 1 December 2010 and will add to the three Hot Rolled Coil steel contracts launched on 18 October 2010.
Clearing of Steel contracts is open to any member approved by the Clearing House to clear trades in the LCH EnClear OTC Clearing Service for Freight. Freight Clearing Members wishing to participate in this market are required to fill in a position account static data form to activate existing accounts or to request new accounts for these contracts. Please contact the Membership department to request a static data form.
The two new contracts will be cash settled monthly; the Turkish Scrap contract against The Steel Index (TSI) and the Chinese Hot Rolled Ribbed Bar contract against a Cleartrade China Steel Index (provided by Umetal). They will be cleared using the ECS system.
This circular sets out in more detail how the clearing service will operate and includes:
1. Contract offering
2. Contract codes
3. Fees
This circular does not include updates to the Clearing House’s Rulebook (General Regulations, Default Rules, Settlement Finality Regulations and Procedures). These are available from the LCH.Clearnet website (www.lchclearnet.com).
1. Contract Offering
| Description | Turkish Import Scrap (SST) Cash settled steel swap – settled against The Steel Index |
| Lot size | 20 mt |
| Currency | US Dollars $ |
| Pricing | US $ per metric tonne |
| Minimum tick | $0.0001 to account for final settlement |
| Fixed price | The traded price or the previous day’s settlement price as supplied end of day by FIS, or any other such source as LCH may determine |
| Floating price | In respect of daily settlement, the floating price will be the end of day price as supplied by FIS, or any other such source as LCH may determine.
In respect of final settlement, the floating price will be the mean of the relevant prices for the contract route as published by The Steel Index each Friday during the contract month |
| Contract Series | Front 1 or 2 months (remaining from front quarter), 5 whole quarters, 2 whole calendar years |
| Expiry / Last
Trading day | Last publication day of the relevant index in the contract month.
Where the last business day of the month is a Friday, this will be the last publication day. Where the last business day of the month is not a Friday, the last publication day will be the following Friday. Where the last Friday of the month / first Friday of the next month is a non-business day, the last publication will be the following business day |
| Delivery | Cash settled monthly against the arithmetic average of all the indices in the contract month |
| Final payment | The first business day following the expiry day |
| Business days | UK business days |
| Description | China Domestic Hot Rolled Ribbed Bar (SBC) Cash settled steel swap – settled against the Cleartrade China Steel Index (provided by Umetal) |
| Lot size | 20 mt |
| Currency | US Dollars |
| Pricing | US $ per metric tonne |
| Minimum tick | US $0.0001 to account for final settlement |
| Fixed price | The traded price or the previous day’s settlement price as supplied end of day by FIS, or any other such source as LCH may determine |
| Floating price | In respect of daily settlement, the floating price will be the end of day price as supplied by FIS, or any other such source as LCH.Clearnet may determine.
In respect of final settlement, the floating price will be the arithmetic average of all the daily Cleartrade China Steel Index (provided by Umetal) indices for that month. |
| Contract series | Front 1 or 2 months (remaining from front quarter), 5 whole quarters, 2 whole calendar years |
| Expiry / Last
Trading day | Last Chinese business day of the contract month.
Where the last Chinese business day is a UK holiday, last trading day will be the previous UK business day. |
| Delivery | Cash settled monthly against the arithmetic average of all the indices in the contract month |
| Final payment | The first UK business day following the expiry day |
| Business days | Chinese business days for the purpose of Index publication
UK business days for the purpose of trade registration, confirmation and final payment |
2. Contract Codes
| Contract | Contract Code |
| Turkish import Scrap | SST |
| Chinese Hot Rolled Ribbed Bar | SBC |
3. Fees
The clearing fees charged by LCH.Clearnet for the Turkish Import Scrap and the Chinese Hot Rolled Ribbed Bar contracts will be $2 per lot. No settlement fees will be charged.
If you have any questions relating to this circular, please do not hesitate to contact Isabella Kurek-Smith on [email protected] or +44 20 7426 7460.
Yours sincerely
Isabella Kurek-Smith
Director, Head of Energy and Freight Markets
Commercial Services