LME clearing house increases amount of offshore yuan that can be held as collateral

The London Metal Exchange's clearing house announced enhancements to its margin collateral services on Monday, saying that members will now have more flexibility in their use of offshore yuan and warrants as collateral.

* The amount of offshore yuan that can be held as collateral by each member has been increased by 50 percent, LME Clear said in a statement, adding that the revised interest rate would be retained until at least the end of 2026.

* In addition, the settlement time for lodging and withdrawing yuan was changed from T-2 to T-1.

* The LME is owned by Hong Kong Exchanges & Clearing (0388). Its clearing house has been accepting offshore renminbi as eligible cash collateral since 2015 to support its Chinese market participants.

* "The changes announced today will particularly benefit Asian members and users who wish to use CNH, as well as boosting the important role played by warehouses in Hong Kong," Michael Carty, LME Clear chief executive, said.

* LME Clear also said that it was now able to accept warrants as collateral for underlying metal stored in Hong Kong, in addition to the eight existing locations.

Reuters

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