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DPL Multiple Day Framework

The Daily Price Limit (“DPL”) Multiple Day Framework outlines the actions the LME will take in relation to contracts impacted by DPLs on multiple days in the same direction.

When does the DPL Multiple Day Framework apply?

The DPL Multiple Day Framework applies when a contract has been impacted by its respective DPL, in the same direction, for multiple days in a row. The LME will automatically suspend the market for that particular metal at the end of the third business day.

This framework only applies to the LME contracts that have DPLs in place (which includes all physically deliverable contracts, plus cash-settled cobalt).

Find out more about volatility controls, price limits and price bands

How does the framework work?

The framework is in effect when the LME determines that a Day 1 “Qualifying Event” has occurred. A Qualifying Event is where the DPL has impacted Closing Prices. The LME shall notify the market of such an event via Notice.

Similarly, if the same contract is impacted by a price move in the same direction for a second consecutive business day, the LME will publish a notice detailing a Day 2 “Qualifying Event”.

See more details of a Day 1 and Day 2 “Qualifying Event” under the DPL Multiple Day Framework (PDF)

Suspension Event

If the same contract is impacted by a price move in the same direction for a third consecutive business day, the LME shall notify the market of a Day 3 Qualifying Event (Suspension Event) which means that the market will automatically be suspended on Day 4.

A Suspension Event under the Framework can only be declared on Day 3, however it should be noted that this does not limit any other powers of the LME to suspend trading on any execution venue under the LME Rulebook.

What happens during a Suspension Event?

If a Suspension Event occurs, it will apply to all futures and options on all venues for the relevant metal that triggered the event. The LME will suspend all contracts in the affected metal, and it will not seek to suspend trading in specific instruments only.

You can read more about what happens during the period of suspension in the DPL Multiple Day Framework (PDF).

Illustrative example

The figure below is an illustration of a potential Suspension Event under the DPL Multiple Day Framework, following a price move upwards for three consecutive business days which, in this example, reaches the DPL on each day.

The market will be notified about the different events at the end of Day 1, Day 2 and Day 3, and on Day 4, the market will be automatically suspended.

Multiple Day Framework

Re-opening the market

In the event a Suspension Event is triggered under the DPL Multiple Day Framework, the LME will decide, at its sole discretion, whether to re-open the market for that relevant metal on Day 4.

The LME shall inform market participants of any such decision via Notice, and will endeavour to re-open the market for that relevant metal as soon as is reasonably practicable.

Once the market is re-opened, the DPL Multiple Day Framework resets such that if that same day, the DPL is reached for any metal, this would be considered a Day 1 Qualifying Event as part of the DPL Multiple Day Framework.

Please find more details below:

24 134 Decision Notice Regarding Daily Price Limits and Proposed Amendments to the LME Rulebook (PDF)

DPL Multiple Day Framework (PDF)

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