The new CAPS contracts are a monthly average price swap, settled in cash against the Exchange’s underlying non-ferrous metals contracts.

They will be accessible to category 1 and 2 members only.

CAPS contracts will be available for the Exchange’s eight non-ferrous metals: Primary Aluminium, NASAAC, Aluminium Alloy, Special High Grade Zinc, Tin, Nickel, Copper Grade A and Standard Lead.

Commenting on the launch, Emma Davey, LME Membership and Business Development Manager said:

“The launch of the CAPS service is a new development in the LME’s ongoing expansion of service offerings to its members. This service is the first step in the Exchange’s plans to provide greater efficiency to the post-trade environment in our core metals products.

“Cleared average price swaps will allow category 1 and 2 members to put their member-to-member transactions through to clearing at LCH.Clearnet with the resulting advantages of a central counterparty”.

LME CAPS – further details

1. A CAPS contract is not tradeable on the Exchange, but is agreed bilaterally “off-Exchange” and brought on to the Exchange for matching and clearing in accordance with the LME Rules and the Rules & Regulations of LCH.Clearnet Ltd.
   
2. CAPS contracts are only available for Category 1 and 2 members.
   
3. CAPS contracts are available for the Exchange’s eight non-ferrous metals.
   
4. Each CAPS contract has the lot size and number of tradeable months shown in the following table:
   
   

   Metal	Lot size (tonnes)	Months
   Primary Aluminium	25	63
   NASAAC	20	27
   Aluminium Alloy	20	27
   Special High Grade Zinc	25	27
   Tin	5	15
   Nickel	6	27
   Copper Grade A	25	63
   Standard Lead	25	15

   
   
5. The near month for CAPS contracts will expire on the last business day of the month.  A new forward month will become available on the first business day of the month.
   
6. Only Category 1 and 2 members may input a CAPS contract into MCS. For any tradeable month, 12:30 on the last business day of the month is the latest trade time that the matching system will accept. Matching will close at 20:00. 
   
7. The prompt date for each tradable month will be two business days after the last business day of that month.
   
8. CAPS contracts will be cash settled on the prompt date.  Settlement will be made by reference to the average monthly settlement price for each metal known as the MASP (Monthly Average Settlement Price). The MASP is already published by the Exchange for use in TAPOs.  The amount due on the prompt date will be the difference between the MASP and the amount agreed in the contract.

Notes to editors:

• The LME is the world’s premier non-ferrous metals market and achieved volumes of almost 93 million lots in 2007, an increase of 7% on 2006 figures and equivalent to $9,500 billion in monetary terms.
• Trading at the LME in non-ferrous metals and plastics takes place across three platforms: through open-outcry trading on the “Ring”; through an inter-office telephone market and through LME Select.
• On 25 February 2008 the Exchange launched Mediterranean and Far East steel billet futures contracts on LME Select and the telephone market. Ring trading will commence on 28 April 2008.