As part of the LME Strategic Pathway, the London Metal Exchange (LME) has expanded implied pricing functionality on LMEselect to include: aluminium, copper, lead, nickel, tin and zinc.
This functionality improves access to existing liquidity and tightens spreads for:
- all the 3rd Wednesday outright order books preceding the 3-month (3M) rolling prompt and the nearest 3rd Wednesday order book immediately following the 3M prompt
- the order books for cash contracts
- associated carry order books connecting the 3-month and nearby 3rd Wednesday contracts or the cash contract.
As part of the temporary change to Ring trading, detailed in Notice 20/067 (PDF), cash contract Official valuations will be determined by electronic trading activity. To support liquidity in the cash contract order books on LMEselect, the implied route between the cash and 3m contracts, linked via the CASH-3M carry, has been enabled effective 20 March 2020
We have produced a Guide to Implied Pricing for Base Metals (PDF) which outlines in more detail what implied pricing is and how it works on our market.
The LMEprecious products have utilised implied pricing for all prompt dates since their July 2017 launch, and the LME Steel Scrap and LME Steel Rebar contracts have had implied pricing functionality enabled since July 2019.
In October 2019 the LME produced an Insight Piece which details the rationale behind implied markets and their growth story.