The London Metal Exchange (LME) announced on Friday that it is taking steps to boost liquidity on its traded options market, increase the transparency of data reporting and offer enhanced protection for participants placing large options orders on the Exchange.
The LME intends to publish richer data for matched traded options to provide greater granularity. In addition, the Exchange’s detailed reports on options will be expanded, so that they will include the expiry date, premium and type of option. The LME will also increase the number of times its matched trades report is released throughout the day – this is supposed to allow more comprehensive analysis of daily volumes.
“The LME is looking to increase liquidity on its traded options market, and the changes we are announcing today are designed to encourage more over-the-counter business to be brought on-exchange,” says Peter Childs, Head of Trading Operations and Price Discovery.
The Exchange has received feedback from its Traded Options Committee and, in response, plans to defer publication of all options trades of 100 lots for two business days from the date they were transacted. At present, the LME publishes matched options trades on a daily basis, and market participants have voiced concerns that this could expose liquidity providers to undue risk.
These measures are expected to become effective from February 8, 2016.
To view the announcement from the LME, click here.