LME Strategic Pathway

LME DISCUSSION PAPER ON MARKET STRUCTURE 2021

The LME’s latest discussion paper, released on 19 January 2021, sets out a range of proposals designed to enable the LME to modernise and adapt to emerging trends and evolving customer needs to create a metals market fit for the future.

Building on the groundwork of 2017’s Strategic Pathway this discussion paper considers several structural changes to the LME, which are focused on four main topics:

  • the Ring and reference prices;
  • enhancing liquidity in the market;
  • the potential benefits of moving to a realised variation margin methodology; and
  • the introduction of potential additional disclosures and policies to strengthen market conduct.

The proposals aim to achieve increased transparency and a structurally fairer and more efficient marketplace. They also take account of the rapidly increasing digitisation across commodity trading and the physical metals industry more broadly.

The LME requested feedback on all topics in the discussion paper from market participants and broader stakeholders. The feedback period is now closed and we aim to provide details of next steps before the end of Q2 2021.

LME Press Release – LME issues discussion paper on future market structure



LME CEO MATTHEW CHAMBERLAIN OUTLINES THE MARKET STRUCTURE DISCUSSION PAPER

In this video update, LME Chief Executive Matthew Chamberlain provides an overview and explanation of the topics included in the LME Discussion Paper on Market Structure.

Covering the key aspects of the paper, he discusses:

  • Why LME market structure is being discussed now
  •  What has guided our proposals
  • The proposed changes
    o The Ring and electronic pricing
    o Enhancing liquidity
    o Realised variation margin
    o Strengthening market conduct
  • Summing up the discussion process.

To move between sections of the video, use the menu in the bottom left of the video, or click on the round points along the timing bar.


LME Strategic Pathway 2017

Published in September 2017, the Strategic Pathway set out our vision to drive growth, following a comprehensive period of engagement with the market.

The Strategic Pathway is underpinned by four key principles:

  • serving the physical market by providing pricing, risk management and terminal market services to the global physical metals industry
  • ensuring fairness and non-discriminatory access to our market
  • increasing user choice and meeting the varied needs of all the LME’s users
  • maximising trading efficiency for customers.

Following the discussion period and taking into account market feedback, the LME implemented:

  • 2017: carry-fee reductions; tick size review
  • H1 2018: Financial OTC Booking Fee introduction; introducing broker membership; B share initiatives; optional T2 booking model
  • H2 2018: new product launches; implied pricing; TAS functionality 
  • 2019: enhancements to clearing services and electronic trading platform.

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