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Intra-day Margining - Frequently Asked Questions
| Q: Are the intra-day calls only made on initial margin (IM)? |
| A: The intra-day calls will take into account changes to initial margin (IM) and variation margin (VM). |
Q: There is the possibility that unmatched trades will result in Members being margined on positions that they don’t hold. In addition, some counterparties may hold back from entering trades until after the 14:00 deadline. What will LCH.Clearnet do to monitor the impact of this on Members? |
A: Currently, there is no foolproof method of ensuring that trades are matched and registered in the correct account intra-day. To counteract this LCH.Clearnet will be working closely with the LME, who will ensure that trades are matched on a timely basis within LMEsmart. |
Q: How will the prices be captured? |
A: Initially LCH.Clearnet will take the three month metal prices prior to 14:00 (UK time) and assume a consistent representation of each curve from end-of-day. LCH.Clearnet will keep this process under review and will work with members to develop the pricing methodology to ensure it continues to meet the needs of the market. |
| Q: How will the intra-day calls be communicated? |
A: An intra-day SPAN parameter file will be available from the same LCH.Clearnet FTP and website as the end-of-day SPAN parameter file, utilising updated prices and new risk arrays. Additional reporting will be available (Excel/CSV formats) detailing the changes in liabilities by IM and VM for each metal enabling members to understand the breakdown and drivers for any intra-day margin call. In the same way as the current process LCH.Clearnet will contact each member to inform that an intra-day call will be made. |
| Q: Will the intra-day data be available via XI Plus? |
A: No. The prices and SPAN risk arrays will be available in the SPAN parameter file on the LCH.Clearnet FTP site and website, as per the current end of day process.
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| Q: Will it be possible to send an email notification to a group email address to advise when an intra-day call has been made? |
A: It is preferred that the members are contacted by telephone, as is currently. This ensures that the member acknowledges the margin call and any issues are resolved in a timely basis.
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| Q: What is the latest time that Members can be called? |
| A: Members can currently be called for additional margin up until 21:00 (UK time). The last scheduled margin run will take place at 17:00 (UK time) and results will be available by 17:30 (UK time). Analysis has shown that if a call is made at 14:00 (UK time), it would be very rare to make an additional call after 17:00 (UK time). |
| Q: What time will Members receive the intra-day call? |
| A: The intra-day margin calculation will be at 14:00 (UK time) and Members should receive the information at 14:30 (UK time). They will be contacted by phone to confirm the margin call. |