LONDON, 21-8-2015 — /EuropaWire/ — The London Metal Exchange (LME) today announces it will introduce market-making programmes to support the launch of new products and enhance liquidity on existing contracts. These are the first programmes of their kind to be introduced by the LME in its 138-year history.
The programmes will provide market makers for the LME’s forthcoming aluminium premium contract and two new ferrous contracts – steel scrap and steel rebar – set for launch on 23 November 2015. The LME is also today announcing a similar market-making programme, coming into effect on 1 October 2015, to boost existing third Wednesday contract liquidity on LMEselect as part of its Liquidity Roadmap initiative.
“This is a big step for the LME as we aim to enhance participation on the Exchange and further develop our range of products for global metals traders,” says Matthew Chamberlain, Head of Business Development at the LME. “These market-making programmes will give our initiatives the best possible start, ensuring they meet the market’s trading and hedging needs from the outset.”
This announcement initiates the formal process to appoint market makers. Parties are invited to submit their proposals by 8 September 2015 for the third Wednesday contracts, and 30 September 2015 for the premium and ferrous contracts.
To support the launch of the LME’s new products, the Exchange also plans to introduce a fee holiday from the date of the new contracts’ launch until the end of this year. As of January 2016, the new contracts will trade on a competitively priced fee schedule, which the LME has also unveiled today.
The programmes and new products are subject to final regulatory approval from the Financial Conduct Authority and rule change consultations for the LME.
Notes for editors:
- Details of all the LME’s proposed market-maker programmes, along with updated contract specifications and fee schedules, are available in Notices 15/263:A256 and 15/264:A257.
- A market maker is a firm that accepts the risk of holding a position in a particular metal futures contract to facilitate trading in that contract. The firm must quote a buy and sell price for a guaranteed number of trading lots and a guaranteed percentage of the LME’s trading hours.
- The LME also recently launched new market participant and liquidity provider programmes (see Notice 15/254:A248).
- The market-making programmes offered as part of the LME Liquidity Roadmap will cover third Wednesday outright contracts, third Wednesday to third Wednesday carries, and three-month to third Wednesday carries, in copper, aluminium and zinc.
- Read more about the LME’s Liquidity Roadmap on lme.com.
- Market makers for new and existing contacts will quote on LME Select. Additionally, Category 1 members will be eligible to submit a proposal to act as Premium Contracts Market Makers quoting in the Ring.
For further information or to speak to an LME spokesperson, please contact:
+44 (0)207 423 5803
+44 (0)207 264 5524
About the London Metal Exchange
The London Metal Exchange, a member of HKEx Group, is the world centre for industrial metals trading.
More than 80% of global non-ferrous metals business is conducted on our three trading platforms: LMEselect (electronic), the Ring (open outcry) and the 24-hour telephone market. The world’s metal community uses the LME to trade futures, options and LMEswaps, to hedge against adverse price movements – prices which are discovered on our markets and used as the global reference.
Participants can trade aluminium, copper, tin, nickel, zinc, lead, molybdenum, cobalt, steel billet and two regionalaluminium alloy contracts. In 2014, 177 million lots were traded on the LME, the equivalent of 4 billion tonnes and $14.9 trillion in notional value.
At the close of the year, approximately 5.8 million tonnes of material was held on LME warrant in more than 670 storage facilities across 37 locations internationally.
SOURCE: London Metal Exchange