The London Metal Exchange (LME) and LME Clear are today publishing a discussion paper on the LME’s market structure which comprehensively sets out the LME’s vision and invites feedback from market participants.
Since its acquisition by Hong Kong Exchanges and Clearing Limited (HKEX), the LME has taken significant steps to enhance its offering to market users, including building a new clearing house and launching new contracts and services. As it moves to the next phase of its development, it is imperative to have a fully informed view and this discussion paper has been devised to this end.
The LME is now embarking on a market-wide engagement period, ending on 30 June 2017. The analysis undertaken in the preparation of the discussion paper, in conjunction with feedback from market users, will provide the LME with the foundations on which it will build specific proposals for future development. Following a period of analysis of the feedback, the LME intends to publish an outcomes document in which it will articulate its strategic direction, expected in the autumn.
The discussion paper is focused on six core topics:
- the LME ecosystem, its stakeholders and their needs;
- trading and booking structures, and the date system;
- clearing structures and services;
- delivery and physical market structure;
- membership; and
- volumes, fee structures and new products.
Commenting on today’s announcement, Matthew Chamberlain, LME CEO, said: “Our core strategic vision is to work with our members to make LME trading more accessible and efficient, while fully respecting our physical roots. This paper lays out the principles on which we plan to build our business, and invites feedback from all stakeholders on the routes by which we deliver that strategic vision.”
The guiding principle of the discussion paper is to protect those features of the LME integral to the physical metals industry, whilst also identifying growth opportunities, maximising participation by market users and creating efficiencies through streamlining the LME structure where possible.
Adrian Farnham, LME Clear CEO, said: “The LME is the global home to metals trading and clearing and working closely and cooperatively with as many of our market participants as possible is critical to our mutual understanding as we map out our development strategy for the coming years.”
James Proudlock, Managing Director and Head of Market Development for the LME and LME Clear, added: “At a time of regulatory, technological and political change, it is crucial for the long-term future development of the LME that we keep pace, whilst also ensuring we meet the needs of our unique user base.”
Notes to editors
During the discussion period, the LME will publish a series of phased briefings that explore each of the six topics covered in the discussion paper. Each briefing will provide a summary and easy to use guide to the key issues facing the market and the LME’s position on each topic. These briefings are designed to facilitate a better understanding of each section of the discussion paper and will be available on the LME website.