LME set to introduce market-making programs

The London Metal Exchange (LME) on Thursday announced it will launch market-making programs to support the rollout of new products and to enhance liquidity on existing contracts.

These are the first programs of their kind to be introduced by the LME in its 138-year history.

The programs will provide market makers for the LME’s forthcoming aluminium premium contract and two new ferrous contracts – steel scrap and steel rebar – expected to launch on November 23, 2015.

In addition, the LME has announced a similar market-making program, coming into effect on October 1, 2015, aimed at enhancing existing third Wednesday contract liquidity on LME Select as part of its Liquidity Roadmap initiative.

“This is a big step for the LME as we aim to enhance participation on the Exchange and further develop our range of products for global metals traders,” says Matthew Chamberlain, Head of Business Development at the LME. “These market-making programmes will give our initiatives the best possible start, ensuring they meet the market’s trading and hedging needs from the outset.”

The announcement marks the start of a formal process to appoint market makers. Parties are invited to submit their proposals by September 8, 2015 for the third Wednesday contracts, and September 30, 2015 for the premium and ferrous contracts.

To support the launch of the LME’s new products, the Exchange also plans to introduce a fee holiday from the date of the new contracts’ launch until the end of this year. As of January 2016, the new contracts will trade on a competitively priced fee schedule, which the LME also presented yesterday.

To view the official announcement by LME, click here.

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