The London Metal Exchange (LME) is a futures and forwards exchange with the world's largest market in standarised

forward contract In finance, a forward contract or simply a forward is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed on at the time of conclusion of the contract, making it a type of derivat ...

futures contract In finance, a futures contract (sometimes called a futures) is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. The asset ...

s and options on

base metals A base metal is a common and inexpensive metal, as opposed to a precious metal such as gold or silver. In numismatics, coins often derived their value from the precious metal content; however, base metals have also been used in coins in the p ...

. The exchange also offers contracts on ferrous metals and

precious metals Precious metals are rare, naturally occurring metallic chemical elements of high economic value. Chemically, the precious metals tend to be less reactive than most elements (see noble metal). They are usually ductile and have a high lu ...

. The company also allows for cash trading. It offers hedging, worldwide reference pricing, and the option of physical delivery to settle contracts.

Overview

Ring trading

Trading Times are 11:40 to 17:00 GMT. The LME is the last exchange in Europe where open-outcry trading takes place.BBC Radio 4 ''

Today Today (archaically to-day) may refer to: * Day of the present, the time that is perceived directly, often called ''now'' * Current era, present * The current calendar date Arts, entertainment, and media Films * ''Today'' (1930 film), a 1930 ...

'', broadcast 25 October 2011. The ring was temporarily closed in March 2020 due to the

COVID-19 pandemic The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identi ...

. In January 2021, LME proposed closing the ring, Europe’s last open-outcry trading floor, and moving permanently to an electronic system. In addition to the 9 companies that have exclusive rights to trade in the Ring, around 100 companies are involved in the LME in total.

Precious metals

The LME used, however, to provide trade matching and clearing services to the London bullion market and distributes gold, silver, and gold IRS (

interest rate swap In finance, an interest rate swap (IRS) is an interest rate derivative (IRD). It involves exchange of interest rates between two parties. In particular it is a "linear" IRD and one of the most liquid, benchmark products. It has associations with ...

s) forward rates on behalf of the LBMA.

Electronic trading

The LME launched an electronic platform called LME Select launched in February 2001. This was developed by a Swedish software house Cinnober. The platform is a FIX-based trading platform, and now handles a majority of the total LME business.

Controversies

Lawsuits

In March of 2022, LME was sued by

Elliot Management Elliot (also spelled Eliot, Elliotte, Elliott, Eliott and Elyot) is a personal name which can serve as either a surname or a given name. Although the given name has historically been given to males, females have increasingly been given the name ...

, an American hedge fund. The hedge fund sued for $456 million, claiming that LME acted "unreasonably and irrationally" when it canceled nickel trades made on March 8th, 2022. Jane Street Global Trading also sued LME for $15.3 million over its cancelled nickel trades in March. Both lawsuits were filed in the English High Court.

References

External links

London Metal Exchange
{{Coord, 51, 31, 16, N, 0, 5, 15, W, type:landmark_region:GB, display=title Financial services companies established in 1877 Commodity exchanges in the United Kingdom Organisations based in the City of London Buildings and structures in the City of London Futures exchanges 1877 establishments in the United Kingdom Organizations established in 1877 Metal industry