LME makes fee and transfer rule changes
LME makes fee and transfer rule changes
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The London Metal Exchange (LME) has introduced a set of measures it says are designed “to optimize its market structure, strengthen its role as the global liquidity center for metals trading, and facilitate enhanced trading opportunities for members and their clients.”
A new “rebalanced” fee rate is being introduced for short-dated carries (including “tomorrow/next” trades) executed by members effective Sept. 1, 2016.
Short-dated carry trades enable users to roll positions from day to day, which the LME calls “a vital component of inventory management for industrial users.”
The LME has concluded that a 44 percent fee reduction on member short-dated carries should be implemented, bringing the cost down to match the client fee of 50 cents per side (trading and clearing inclusive). This fee is lower than the approximately 58 cents charged prior to the LME’s fee changes in 2015.
The LME also says it will limit the charges for member and client position transfers, which will enable users to migrate large open positions “in order to manage portfolios as efficiently as possible.” The average cost for such large position transfers in 2015 was approximately $30,000. Such charges will now be capped at $10,000 per transfer, says the LME.
Additionally, LME Clear has designed and will implement a new margining methodology designed to reduce the initial margin payable for LME positions. The LME, which is owned by Hong Kong Clearing and Exchanges (HKEX), says the new methodology will continue to provide “best-in-class risk management and market stability.” The new approach, which remains subject to final regulatory approval, is expected to significantly reduce initial margin, in particular for aluminum and copper, and to lower the all-in cost of LME trading for members and their customers.
“The LME remains the cornerstone of HKEX’s global commodity strategy,” says HKEX Chief Executive Charles Li. “In addition to these market structure changes, we will continue to expand the LME’s presence in Asia, especially China, through enhancing connectivity with China’s commodities market, continuing to push for LME-certified warehouses in China, and launching a physical platform in Shenzhen, China. We are making good progress on these initiatives.”
The LME says its membership “provided an invaluable forum for the discussion of new initiatives and business opportunities.” Adds LME Chief Executive Garry Jones, “The LME has undertaken detailed discussions over the last few months with all of its members and many end user clients on ways to evolve our market. The work of the many LME committees has helped considerably in understanding the concerns of all stakeholders. We’re pleased to be able to deliver a package of measures that reinforces our commitment to the LME’s unique prompt date structure and supports the physical underpinning of the Exchange.”
Finally, the LME says it has committed to review its suite of incentive programs. “Along with their structured fee schedules, these programs are designed to generate visible liquidity across the curve, for the benefit of members and clients. The LME will work with users to ensure that the programs are optimally structured to support the whole LME market for the benefit of all stakeholders,” says the exchange.
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Source: Recycling Today
LME makes fee and transfer rule changes
<![CDATA[The London Metal Exchange (LME) has introduced a set of measures it says are designed “to optimize its market structure, strengthen its role as the global liquidity center for metals trading, and facilitate enhanced trading opportunities for members and their clients.” A new “rebalanced” fee rate is being introduced for short-dated carries (including “tomorrow/next” trades) executed by members effective Sept. 1, 2016. Short-dated carry trades enable users to roll positions from day to day, which the LME calls “a vital component of inventory management for industrial users.” The LME has concluded that a 44 percent fee reduction on member short-dated carries should be implemented, bringing the cost down to match the client fee of 50 cents per side (trading and clearing inclusive). This fee is lower than the approximately 58 cents charged prior to the LME’s fee changes in 2015. The LME also says it will limit the charges for member and client position transfers, which will enable users to migrate large open positions “in order to manage portfolios as efficiently as possible.” The average cost for such large position transfers in 2015 was approximately $30,000. Such charges will now be capped at $10,000 per transfer,…