The London Metal Exchange has set out its strategic pathway following a comprehensive period of engagement with its users.
The LME received 162 responses to its discussion paper on market structure from a broad range of users, whose feedback was instrumental to the formulation of the LME’s strategic pathway.
Matthew Chamberlain, London Metal Exchange Chief Executive, said: “We are delighted that so many members of the metals community took the time to respond in detail to the discussion paper. Respondents’ views were aligned in a number of areas, which helped us to refine our strategic priorities, resulting in a plan that balances the needs of all our users in support of fairness, user choice and trading efficiency, while strengthening our roots in the physical market.”
The LME will reduce carry fees and intends to introduce a new financial OTC fee with effect from 1 January 2018 to ensure fairness in LME fee structures.
To support its physical user base and further encourage use of the daily date structure – including tom-next and monthly rolls – the LME is substantially reducing short- and medium-dated carry fees. Effective from 1 October 2017, short-dated carries executed by members on the Ring and LMEselect will be reduced to $0.15 and $0.25 respectively, with inter-office and basis trades discounted to $0.35. These levels are lower than those in force in 2011, prior to increases in third-party clearing fees and LME commercialisation. Client contracts for short-dated carries will be reduced to $0.25.
From 1 November 2017, a new fee category of medium-dated carry trades – where all legs fall within 35 calendar days forward from the closest prompt date – will be introduced. Trades in this category executed by members on the Ring and LMEselect will be reduced to $0.25 and $0.45 respectively, with inter-office trades discounted to $0.70. Member-to-member basis trades and all client contracts in this category will be reduced to $0.45.