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| Originating department: | Commercial Services |
| Company Circular No: | LCH.Clearnet Ltd Circular No 3062 |
| Service Circular No: | LCH EnClear No 351 |
| Date: | 16 January 2012 |
| To: | All LCH.Clearnet EnClear Clearing Members |
Launch of LCH EnClear OTC clearing service for Iron Ore Options
LCH.Clearnet is pleased to announce that it will be launching an OTC Clearing service for Iron Ore options on Monday 23 January 2012 . The service is an extension of LCH.Clearnet’s existing LCH EnClear OTC clearing service for Iron Ore TSI swaps.
Contracts will be cleared using the ClearWay and ECS systems and will be exercisable into the underlying TSI swaps contracts.
All Members currently clearing Iron Ore swaps will automatically have access to the option contracts. Members not currently clearing Iron Ore swaps, but approved to clear Freight (FFAs), will need to complete a static data form.
Additional information
- The contract code in ClearWay will be TSO
- The LCH.Clearnet clearing fee will be $25/lot. No exercise or settlement fees will be charged
- ECS will be open for trade registration of Iron Ore option contracts from 07:00 to 18:00 hrs UK time and until 18:30 for member confirmation
- Please contact the Membership department at [email protected] to request a Static Data Form to set up new accounts, if required.
The Options contracts will be margined using London SPAN version 4. Details of all margin obligations will be included in the standard suite of member reports that are available through the extranet website
Contract Specification
| Contract description – Cash Settled Premium Paid Option on TSI Iron Ore (62% Fe) contract | |
| Description | Cash settled Premium Paid Option on the TSI Iron Ore contract
|
| Lot size | 1,000 mt |
| Currency | US Dollars |
| Minimum tick | US $ 0.01 per mt |
| Option Premium | The Premium is paid at the time of purchase. |
| Last trading day | Last business day of each month within the contract series. |
| Expiry | 18:00 hours UK time on the last trading day Automatic exercise settings are pre-set to exercise contracts which are one minimum price fluctuation or greater in-the-money when compared to the relevant reference price. Members are not permitted to override automatic exercise settings or manually enter exercise instructions for this contract. The reference price will be a price in US dollars and cents per metric ton equal to the final settlement price for the underlying Iron Ore swap contract. |
| Contract series | Out to a maximum of 35 months |
| Strike Price | Any whole $ value |
| Business days | UK business days |
If you have any questions relating to this circular, please do not hesitate to contact me on [email protected] or +44 20 7426 7460.
To request a Static Data Form please contact our Membership department on [email protected] or 0207 426 7949.
Yours sincerely
Isabella Kurek-Smith
Director, Head of Energy and Freight Markets
Commercial Services