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No. It is possible to be a SWORD user without being an LME member. Companies need to undertake a rigorous testing process in order to obtain approval from both the LME and LCH.Clearnet. Initial applications should be channelled through the LME Helpdesk and LCH.Clearnet.
Membership of the LME is on a corporate basis and through election by the board. There are various categories of member. These categories are basically divided between broker members and trade members. The criteria required for an applicant company to be successfully elected will vary according to category.
Broker members are those companies allowed to issue LME contracts - buying and selling metal on behalf of their customers. Trade members are industrial or financial companies, with an interest in the metals industry, who take out an LME membership, primarily, in order to be kept informed of the strategic development of the Exchange. They cannot issue LME contracts; if they wish to trade, they must do so through a broker member or a subsidiary or agent acting on behalf of a broker member.
You can access real time or 30 minute delayed LME prices, report data and charting direct from the Exchange through LMElive, at www.lmelive.com. LMElive is designed to provide a comprehensive view of non-ferrous, steel billet and plastics futures trading with easy access over the Internet. You can also view data on your mobile handheld device or BlackBerry™ or iPhone with LMElive Anywhere. Sign up for a four week free trial.
The LME also distributes its market data through Licensed Data Distributors. These distributors range from data vendors to specialist industry publications and news providers. You do not need to become a member of the Exchange to access LME market data.
The LME offers a limited set of free data products delivered on a next day delayed basis. This data can be accessed from the Free Data Service, after completing a simple registration process. LME data available free of charge includes pricing information and a limited number of reports for LME non-ferrous metals, steel billet and plastics contracts.
LME week always takes place in October. Many of the events are organised by the broker members and are by invitation. The Exchange organises two events; a metals seminar and the dinner. The LME invites a limited number of guests to the dinner, the majority of attendees are guests of member companies who purchase the tickets. The metals seminar is a ticket affair and these are available from the Exchange. A nominal charge is made to ensure commitment. For details of the LME organised events refer to our events listing. Other events during LME week are occasionally organised by industry participants which may also be listed.
The LME Education department offers an extensive range of interactive courses which cover many aspects of pricing, trading and hedging on the LME as well as regulation, physical trading and hedge accounting. For more information on course content, dates and locations please email lme.education@lme.com or visit our website.
Listing guidance notes for the registration of material as a brand good for delivery to satisfy an LME contract provide information and assistance in meeting the requirements for registration. The process differs for each metal, steel or plastic contract traded on the Exchange.
The LME is not the natural source for physical metal. It is rather, a financial market, used mainly for limiting future price risk, supported by a delivery of last resort. Consumers wishing to buy physical metal normally do so directly from producers or through merchants. Some LME members do have a physical department.
Metal to meet deliveries of LME contracts, that do go to delivery, is stored on warrant in LME-approved warehouses and must meet the specifications of the individual metal contracts as laid down by the LME. In order to ensure the quality of metal held on warrant for delivery against LME contracts, all such metal must be of a brand listed as good delivery by the directors of the LME. If a party wishes to buy metal via the LME it can do so through a broker on the LME. It should be noted that delivery is at seller's option and the location, production source and shape cannot be guaranteed. However, the metal will be of a brand and specification in accordance with LME rules and will be stored in an LME approved warehouse. The LME price is 'in warehouse' and the costs of taking up that metal will have to be met by the buyer.
Trading on the LME must be completed through an LME broker member (categories 1, 2 and 4) or an agent or subsidiary company acting on behalf of a broker member. Contractual arrangements between brokers and their customers are on a principal-to-principal basis and are negotiable.
For full details of current LME members visit www.lme.com/membership.asp.
LME historical data published in years prior to the current year is available to purchase from the LME online store.
LME contracts between clearing members are cleared and margined by LCH.Clearnet.
LCH.Clearnet set the initial margin rates and these will vary across the commodities traded on the LME. They may also change the initial rate from time to time depending on volatility. LCH use a system known as SPAN margining. This means that each day, brokers’ positions are evaluated and they request any maintenance margins required against their overall net position. However, LME margins can be covered by collateral rather than cash. Collateral can be in various forms – bankers guarantees or LME warrants for example.
Brokers will also margin their customers. Under LME rules, these margins will be at least equal to the LCH rates but they may well be higher depending on the same factors used for contractual terms. LME brokers can issue credit lines to their customers and may accept collateral for margining. Of course if margins are covered by cash, then this cash should earn interest for the customer while it is held by the broker.
For details of the current margining rates visit The LCH.Clearnet website.
An option is a contract which gives the buyer the right, but not the obligation to buy or sell metal or the index at a specific price for a specified time. For this right, the buyer pays a premium. The buyer of LME-traded options has three choices of activity. They can exercise (declare) the option, when they will receive a futures contract as specified in the option contract; they can abandon the option, whereby nothing happens but they lose their premium; or they may be able to trade the option by selling it back to the market, so reclaiming some or all of the premium or even making a profit.
There are two types of options calls and puts:
A call option gives the buyer the right but not the obligation to buy the underlying metal or index contract. The seller of a call option has the obligation to sell the underlying metal or index contract should the buyer exercise.
A put option gives the buyer the right but not the obligation to sell the underlying metal or index contract. The seller of a put option has the obligation to buy the metal or index contract should the buyer choose to exercise.
The LME trades futures and traded option contracts for non-ferrous industrial metals namely Primary Aluminium, Aluminium Alloy, NASAAC, Copper Grade A, Standard Lead, Primary Nickel, Tin and Special High Grade Zinc.
Two global plastics futures contracts and six regional futures contracts are traded in Polypropylene and Linear Low Density Polyethylene.
The LME also trades steel billet futures and two new Cobalt and Molybdenum contracts will be launched on February 22nd 2010.
The LME also has an index contract LMEX, which tracks the six primary non-ferrous metals traded.
In addition, the LME offers LMEminis, which are smaller-sized contracts for Copper, Aluminium and Zinc. For information researching metals not traded on the LME, we recommend you contact the appropriate trade association, many of which are listed in the useful links section.
Check the Summary LME Contract Specifications for Futures or Options or Traded Average Price Options or choose a contract from the drop down menu on the left to check the specifications by material type.
LMEminis can be traded via LMEselect by members, and clients of members can trade through a member’s order routing system, or via the telephone.
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