LCH.Clearnet enters dairy market

LCH.Clearnet SA (LCH.Clearnet) is set to clear Skimmed Milk Powder (SMP) Futures Contracts traded on NYSE Liffe. Increasing price volatility in European and international dairy markets means both producers and market participants are looking to manage exposure to price risk through cleared trading opportunities.

Cleared SMP futures contracts will enable market participants to benefit from efficient price risk management, reduced credit risk, enhanced capital efficiency and the operational resilience of reliable and secure systems. The service is a natural extension to LCH.Clearnet’s commodities offering which has over 40 years proven experience.

The contracts will be traded in multiples of 24 tonnes, and will be delivered in January, March, May, July, September and November. Physical delivery will be carried out at delivery points that are within a 150km radius of Antwerp, Hamburg or Rotterdam, making this the vastest delivery zone in Europe. The first delivery will take place in March 2011. SMP contracts will be cleared through LCH.Clearnet’s standard derivatives clearing system.

Christophe Hémon, CEO of LCH.Clearnet SA said: “Skimmed Milk Powder is a valuable addition to our broad range of existing futures and options contracts. Volumes in the commodities segment have increased significantly over the past year and we believe that this trend will continue. It demonstrates our commitment to extending our clearing services in line with client and market demand.”

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