Export Growth
June 16, 2026
LME Clear raises renminbi collateral limit, accepts Hong Kong warrants
Written by Nicholas Bell
LME Clear, the clearing house for the London Metal Exchange (LME), will increase the amount of offshore renminbi (CNH) each member can hold as collateral to CNH 135 million (about US $20 million based on June 16 exchange rates) from CNH 90 million.
It also will reduce the advance notice required to lodge and withdraw CNH collateral to one US business day from two days.
The clearing house said it will now accept warrants representing metal stored in Hong Kong as collateral, extending its warrant collateral structure to include a ninth warehouse location.
The rule changes are set to take effect June 22.
According to the LME, owned by Hong Kong Exchanges and Clearing Limited (HKEX), the changes follow revisions introduced in October that increased the interest paid on CNH held as collateral. LME Clear said the current interest calculation, based on the China Deposit Interest Rate (CDIR) minus zero basis points, will remain in effect through the end of 2026.
CNH collateral changes
LME Clear has accepted offshore renminbi as eligible cash collateral since 2015. The June announcement raises the member CNH collateral limit by 50% while shortening the notice period required to either deposit or withdraw CNH collateral to one business day from two.
Separate collateral schedules published June 9, 2026, and July 7, 2025 show the haircut applied to CNH collateral remained unchanged at 8.97%.
A haircut is the percentage reduction applied to the market value of collateral when determining how much collateral value a clearing member receives for margin purposes.
For example, a member posting CNH 100 million as collateral would receive about CNH 91 million of recognized “collateral value” after the 8.97% haircut is applied. In other words, a clearing member seeking CNH 100 million of recognized collateral value would need to post roughly CNH 110 million of CNH collateral.
The reduction is intended to account for potential changes in the value of collateral during periods of market stress.
Hong Kong added to warrant collateral system
LME Clear also said it will accept warrants as collateral for underlying metal stored in Hong Kong.
Warrants as collateral allow clearing members to pledge LME warehouse warrants, which represent ownership of metal stored in approved LME warehouse locations, to satisfy margin requirements rather than posting additional cash or securities. According to LME Clear, warrants may only be used to collateralize positions in the same underlying metal, as aluminum warrants may only be used against aluminum-related margin requirements.
The addition of Hong Kong places the location alongside approved warrant-collateral warehouse locations in Belgium, England and Wales, Malaysia, the Netherlands, Singapore, South Korea, Taiwan and the United States.
The LME approved Hong Kong as an LME warehouse location in January 2025 and approved its first four licensed warehouse facilities in April 2025. According to the exchange Hong Kong warehouses are permitted to store LME-registered primary aluminum and aluminum alloy, as well as other non-ferrous metals traded on the exchange.
