LME Clear stretched by CCP stress tests

The clearing house for the London Metal Exchange (LME) would burn through all its prefunded default resources in a severe market crisis, a European Union-wide stress test of central counterparties shows.

Under a doomsday scenario set in March 2019 in which the CCP’s top two clearing members collapse, LME Clear would incur about €712 million ($808 million) of losses beyond the required initial margin of the defaulters, exceeding its €446 million of prefunded guaranty resources. The additional