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NEWS ALERT
LME's clearing house declares Lehman Brothers a "defaulter"
BaseMetals.com - LCH.Clearnet, who clears business on the London Metal Exchange, said on Monday it had issued a default notice to Lehman Brothers International Europe
Sept. 15 (Bloomberg) -- Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank, was suspended from energy and commodities trading in London after Europe's biggest clearing house declared the company a defaulter.
The London Metal Exchange, the world's largest copper bourse, the Liffe commodities exchange, and Intercontinental Exchange Inc.'s ICE Futures Europe, part of the second-biggest energy exchange, all suspended Lehman today. LCH.Clearnet Group Ltd., which clears trades, declared Lehman's European subsidiary a defaulter.
``Lehman is an important counterparty in the commodity markets,'' Robin Bhar, a strategist at Calyon in London, said by phone. Still, the bank's positions on the LME are ``unlikely to be huge,'' he said.
Lehman was forced to file for bankruptcy after two suitors, Barclays Plc and Bank of America Corp., abandoned takeover talks yesterday. It joins Bear Stearns Cos., Merrill Lynch & Co. and more than 10 banks that couldn't survive the credit crunch.
The firm's value-at-risk to commodities, a measure of how much the bank estimates it could lose, averaged $15 million a day in the quarter ended Aug. 31, compared with $12 million in the previous quarter, according to a Sept. 10 statement.
Lehman is a so-called category 2 member of the LME and eligible to issue and clear contracts. It can't trade on the floor of the exchange. It was suspended from trading on the bourse's Select electronic platform. The LME trades copper, aluminum, zinc, nickel, tin, lead, steel and plastics.