LME model quirk saved members $915m nickel margin

Report on March 2022 blow-up says CCP may need to “intervene” on deduction of VM gains from IM

Nickel

The London Metal Exchange’s unusual approach to margining, which allows members to net variation margin (VM) gains against initial margin (IM), led to a “maximum of $915 million” in offsets for members with clients that were short nickel in the six months leading up to the March 2022 blow-up.

An independent report, written by consultancy Oliver Wyman and commissioned by LME, and published on January 10, stopped short of recommending that the practice be abolished altogether. But it warned that

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options

Most read articles loading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here