The Exchange provides the environment for trading and regulates the operation of the market. It has a statutory requirement to ensure that business on its markets is conducted in an orderly manner, providing proper protection to investors.
Approved as a recognised investment exchange (RIE) and conforming with UK and other international regulatory requirements, the LME offers, through price and volume transparency and audit trails, a legally safe forum for metals trading. As an RIE, the Exchange comes under the direct jurisdiction of the UK Financial Conduct Authority (FCA).
Regulation of the market is largely carried out by the LME, while the FCA is responsible for regulating the financial soundness and conduct of LME members' business.
Beyond this, both the Exchange and its members are subject to regulatory controls and input from various UK bodies and government offices, as well as EU directives. In international trading, rules applied by overseas regulatory bodies such as the US Commodity Futures Trading Commission (CFTC) also have to be taken into account.
To ensure the observance of these regulations, the LME has a compliance department under the supervision of the Executive Director of Regulation & Compliance.
Regulation at the LME consists of three divisions:
Rules and regulations
The LME employs a published set of rules and regulations which form the basis of sustaining an orderly market, membership criteria, committees, and disciplinary procedures.
Arbitration at the LME comes undertaken by the arbitration committee with the purpose of settling member-to-member disputes.