The Risk Controllers: Central Counterparty Clearing in Globalised Financial Markets

6

The London Produce Clearing House

6.1 CLEARING FOR PROFIT

Mincing Lane in the City of London exuded an air of quiet competence in the 1880s. Then and for decades afterwards it was the centre of London's commodity trade.

The narrow street eschewed celebrity and notoriety. Mincing Lane was, the Financial Times observed in its first edition, ‘one of the most unassuming business centres of the City’ and yet had ‘an air of solidity, peculiar to itself’.¹

But, as the newspapers of the time suggest, Mincing Lane was in a state of considerable agitation early in 1888 because of plans to set up the London Produce Clearing House (LPCH).²

Warning that the venture would benefit ‘those who gamble pure and simple,’ the FT reported with some relish that: ‘The oldest and best established firms in Mincing Lane are up in arms against any such scheme.’ Its correspondent advised the newspaper's readers to ‘look out for some fun’ should the plan go ahead.

For some established traders of Mincing Lane, the idea of LPCH was no source of amusement. They were not so much concerned about gambling, as the fact that the business plan for LPCH would change the way they had traded commodities for decades.

Adopting the methods pioneered in Le Havre, the clearing house planned to guarantee the completion of futures contracts in a variety of commodities starting with coffee and sugar as an entrepreneurial, for-profit venture.

LPCH's shares were to be offered to a broad public and listed on the London Stock Exchange. ...