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{{Short description|Futures exchange in London, England}}
The '''London Metal Exchange''' or '''LME''' is the [[futures exchange]] with the world's largest market in [[option]]s and [[futures contract]]s on [[base metal|base]] and other metals. As the LME offers contracts with daily expiry dates up to three months from trade date, along with longer dated contracts, it also allows for cash trading. It offers [[hedging]], worldwide reference pricing and storage for physical delivery of trades.
{{Use dmy dates|date=April 2022}}
{{Infobox organization
| name = London Metal Exchange
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The '''London Metal Exchange''' ('''LME''') is a futures and forwards exchange in [[London]], [[United Kingdom]] with the world's largest market<ref name=ReutersClear>{{cite web |url=https://www.reuters.com/markets/europe/clear-street-seeks-join-london-metal-exchanges-open-outcry-trading-floor-source-2024-09-25/|title=Clear Street seeks to join London Metal Exchange's open-outcry trading floor, source says|publisher=[[Reuters]] }}</ref> in standardised [[forward contract]]s, [[futures contract]]s and options on [[base metals]]. The exchange also offers contracts on [[ferrous metals]] and [[precious metals]].<ref>{{cite web |title=Forward & Futures Contract Specifications |url=https://www.lme.com/en-gb/metals/non-ferrous/aluminium/contract-specifications/futures/ |publisher=London Metal Exchange |access-date=7 August 2015 |archive-date=4 March 2016 |archive-url=https://web.archive.org/web/20160304040533/https://www.lme.com/en-gb/metals/non-ferrous/aluminium/contract-specifications/futures/ |url-status=dead }}</ref> The company also allows for cash trading. It offers [[Hedge (finance)|hedging]], worldwide reference pricing, and the option of physical delivery to settle contracts.
It is located at 56 [[Leadenhall Street]], [[London]].


== History ==
== 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.<ref name=Today>BBC Radio 4 ''[[Today (BBC Radio 4)|Today]]'', broadcast 25 October 2011.</ref> The ring was temporarily closed in March 2020 due to the [[COVID-19 pandemic]].<ref>{{cite news |last1=Agini |first1=Samuel |title=LME to shut down Ring trading after member tests positive for Covid-19 |url=https://www.fnlondon.com/articles/lme-to-shut-down-ring-trading-after-member-tests-positive-for-covid-19-20200317 |access-date=5 March 2021 |work=[[Financial News]] |date=17 March 2020}}</ref> In January 2021, LME proposed closing the ring, Europe's last open-outcry trading floor, and moving permanently to an electronic system.<ref>{{cite news |last1=Burton |last2=Jack |first2=Farchy |first1=Mark |title=London's Raucous Trading Ring Calls Time on 144-Year History |url=https://www.bloomberg.com/news/articles/2021-01-19/london-metal-exchange-to-propose-closing-trading-ring-for-good |access-date=5 March 2021 |work=[[Bloomberg News]] |date=19 January 2021 |language=en}}</ref><ref>{{cite news |last1=Desai |first1=Pratima |title=End of an era? London Metal Exchange proposes closure of open-outcry trade |url=https://www.reuters.com/article/uk-lme-trading/end-of-an-era-london-metal-exchange-proposes-closure-of-open-outcry-trade-idUSKBN29O1MP |access-date=5 March 2021 |work=[[Reuters]] |date=19 January 2021 |language=en}}</ref> However, the ring reopened in September of the same year after resistance from members.<ref>{{Cite news |last=Partridge |first=Joanna |date=2021-06-08 |title=‘Open outcry’ trading to restart at London Metal Exchange |url=https://www.theguardian.com/business/2021/jun/08/open-outcry-trading-to-restart-at-london-metal-exchange |access-date=2024-06-05 |work=The Guardian |language=en-GB |issn=0261-3077}}</ref>
The London Metal Market and Exchange Company was founded in [[1877]] but the market traces its origins back to [[1571]] and the opening of the [[Royal Exchange]]. At first only [[copper]] was traded, [[lead]] and [[zinc]] were soon added but only gained official trading status in [[1920]]. The exchange was closed over [[World War II|WW II]] and did not re-open until [[1952]]. Other metals traded extended to include [[aluminium]] ([[1978]]), [[nickel]] ([[1979]]), aluminium alloy ([[1992]]), and silver ([[1999]]). Base metals are traded through LMEX since [[2000]]. The total value of the trade is around $3,000 billion annually.


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.
== Markets ==


===Precious metals===
There is constant inter-office trading through the [[London Clearing House]] but some trading is still done by open outcry in the Ring. There are a morning and an afternoon trade, where each of the eight metal contracts are traded in two blocks with a five minute session for each contract (the sessions last from 11.40 until 13.15 and from 15.10 until 16.35, each session includes a ten minute break). The second trading block in the morning is key to setting the Daily Official Exchange rates. After the official trades there is fifteen minutes of "kerb" trading. Trades are in futures, options and TAPOs (traded average price contracts, a form of [[Asian option]]).
The LME used,<ref>{{Cite web |url=https://www.lme.com/~/media/Files/Notices/2014/2014_09/14%20269%20A261%20Precious%20Metals%20Price%20Data%20and%20Matching%20and%20Clearing%20Services.pdf |title=Archived copy |access-date=2015-03-31 |archive-url=https://web.archive.org/web/20150326003035/http://www.lme.com/~/media/Files/Notices/2014/2014_09/14%20269%20A261%20Precious%20Metals%20Price%20Data%20and%20Matching%20and%20Clearing%20Services.pdf |archive-date=2015-03-26 |url-status=dead }}</ref> however, to provide trade matching and clearing services to the London bullion market and distributes gold, silver, and gold IRS ([[interest rate swap]]s) forward rates on behalf of the LBMA.


===Electronic trading===
There are eleven companies who have exclusive rights to trade in the Ring and around 100 companies involved in the LME in total.
The LME launched an electronic platform called LME Select launched in February 2001.<ref name="select">{{cite web |title=LME Select |url=https://www.lme.com/Trading/Systems/LMEselect |access-date= |publisher=London Metal Exchange}}</ref> This was developed by a [[Sweden|Swedish]] software house Cinnober. The platform is a FIX-based trading platform, and now handles a majority of the total LME business.


===LME Clear===
Contrary to popular belief, the precious metals, [[gold]] and [[silver]] are not traded on the London Metal Exchange, but on the [[over-the-counter (finance)|over-the-counter]] market usually referred to as the [[London bullion market]], by the members of the London Bullion Market Association. Also, [[platinum]] and [[palladium]] are traded on the [[London Platinum and Palladium Market]].
LME Clear is the clearing house for the London Metal Exchange. Launched in 2014 it was designed and built in consultation with the market to provide cost-efficient, EMIR compliant clearing and settlement services, using cutting-edge technology. LME Clear has announced the appointment of David Warren as Chairman effective July 20, 2023. David will succeed Marco Strimer, who will step down as chairman at the end of his term of office.<ref>{{cite web |title=Crisis-hit LME's clearing house names former LSE CFO as chair|url=https://www.reuters.com/world/uk/crisis-hit-lmes-clearing-house-names-former-lse-cfo-chair-2023-07-05/ |access-date= |publisher=Reuters}}</ref><ref>{{cite web |title=New chairman of LME Clear board|url=https://metals-news.com/breaking-news/new-chairman-of-lme-clear-board// |access-date= |publisher=metals-news.com}}</ref>


== See also ==
==History==
LME can trace its history to metals trading in [[Royal Exchange, London]].<ref name=investopedia>{{cite web |url=https://www.investopedia.com/terms/l/londonmetalexchange.asp|title=What Is the London Metal Exchange (LME)? Definition and History|publisher=[[Investopedia]] }}</ref>


It was purchased by [[Hong Kong Exchanges and Clearing]] in 2012.<ref>{{cite news |author=<!--not stated--> |date=15 June 2012 |title=London Metal Exchange in £1.4bn sale to Hong Kong |url=https://www.bbc.com/news/business-18455901 |work=[[BBC]] |access-date=7 October 2024}}</ref>

In March 2022, LME was sued by [[Elliott Management Corporation|Elliott Management]], 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 8, 2022.<ref>{{Cite web |date=2022-06-06 |title=London Metal Exchange sued for $456m over cancelled trades |url=https://www.theguardian.com/business/2022/jun/06/london-metal-exchange-sued-cancelled-trades-elliott-management |access-date=2022-06-21 |website=the Guardian |language=en}}</ref> Jane Street Global Trading also sued LME for $15.3 million over its cancelled nickel trades in March.<ref>{{Cite web |last=Smith |first=Elliot |date=2022-06-07 |title=London Metal Exchange hit with two U.S. lawsuits over nickel trading chaos |url=https://www.cnbc.com/2022/06/07/london-metal-exchange-hit-with-two-us-lawsuits-over-nickel-trading-chaos.html |access-date=2022-06-21 |website=CNBC |language=en}}</ref> Both lawsuits were filed in the [[High Court of Justice]].<ref>{{Cite news |date=2022-06-06 |title=London Metal Exchange sued for $456m over cancelled nickel trades |language=en-GB |work=BBC News |url=https://www.bbc.com/news/business-61701238 |access-date=2022-06-21}}</ref> In November 2023, the court ruled in LME's favor, with Elliott and Jane Street appealing the decision to the [[Court of Appeal (England and Wales)|Court of Appeals]].<ref>{{cite news |last1=Onstad |first1=Eric |title=Hedge fund Elliott challenges court verdict it lost against LME on nickel |url=https://www.reuters.com/markets/commodities/hedge-fund-elliott-challenges-court-verdict-it-lost-against-lme-nickel-2024-07-09/ |access-date=16 August 2024 |work=Reuters |date=10 July 2024}}</ref>

==See also==
*[[List of futures exchanges]]
*[[List of futures exchanges]]
*[[London Platinum and Palladium Market]]

==References==
{{Reflist|30em}}


==External links==
==External links==
* http://www.lme.co.uk/
*[http://www.lme.com London Metal Exchange]
* httt://www.trabzonspor.net


{{Economy of the United Kingdom}}
[[Category:Commodity exchanges]]
{{Authority control}}
[[Category:Economy of London]]
{{Coord|51|31|16|N|0|5|15|W|type:landmark_region:GB|display=title}}


[[Category:Financial services companies established in 1877]]
[[de:London Metal Exchange]]
[[Category:Commodity exchanges in the United Kingdom]]
[[fr:LME]]
[[Category:Organisations based in the City of London]]
[[sl:LME]]
[[Category:Buildings and structures in the City of London]]
[[Category:Futures exchanges]]
[[Category:1877 establishments in the United Kingdom]]
[[Category:Organizations established in 1877]]
[[Category:Metal industry in the United Kingdom]]
[[Category:2012 mergers and acquisitions]]

Latest revision as of 14:42, 29 November 2024

London Metal Exchange
Formation1877; 147 years ago (1877)
PurposeTrading in metals and metals-related contracts
OwnerHong Kong Exchanges and Clearing

The London Metal Exchange (LME) is a futures and forwards exchange in London, United Kingdom with the world's largest market[1] in standardised forward contracts, futures contracts and options on base metals. The exchange also offers contracts on ferrous metals and precious metals.[2] The company also allows for cash trading. It offers hedging, worldwide reference pricing, and the option of physical delivery to settle contracts.

Overview

[edit]

Ring trading

[edit]

Trading times are 11:40 to 17:00 GMT.

The LME is the last exchange in Europe where open-outcry trading takes place.[3] The ring was temporarily closed in March 2020 due to the COVID-19 pandemic.[4] In January 2021, LME proposed closing the ring, Europe's last open-outcry trading floor, and moving permanently to an electronic system.[5][6] However, the ring reopened in September of the same year after resistance from members.[7]

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

[edit]

The LME used,[8] however, to provide trade matching and clearing services to the London bullion market and distributes gold, silver, and gold IRS (interest rate swaps) forward rates on behalf of the LBMA.

Electronic trading

[edit]

The LME launched an electronic platform called LME Select launched in February 2001.[9] 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.

LME Clear

[edit]

LME Clear is the clearing house for the London Metal Exchange. Launched in 2014 it was designed and built in consultation with the market to provide cost-efficient, EMIR compliant clearing and settlement services, using cutting-edge technology. LME Clear has announced the appointment of David Warren as Chairman effective July 20, 2023. David will succeed Marco Strimer, who will step down as chairman at the end of his term of office.[10][11]

History

[edit]

LME can trace its history to metals trading in Royal Exchange, London.[12]

It was purchased by Hong Kong Exchanges and Clearing in 2012.[13]

In March 2022, LME was sued by Elliott Management, 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 8, 2022.[14] Jane Street Global Trading also sued LME for $15.3 million over its cancelled nickel trades in March.[15] Both lawsuits were filed in the High Court of Justice.[16] In November 2023, the court ruled in LME's favor, with Elliott and Jane Street appealing the decision to the Court of Appeals.[17]

See also

[edit]

References

[edit]
  1. ^ "Clear Street seeks to join London Metal Exchange's open-outcry trading floor, source says". Reuters.
  2. ^ "Forward & Futures Contract Specifications". London Metal Exchange. Archived from the original on 4 March 2016. Retrieved 7 August 2015.
  3. ^ BBC Radio 4 Today, broadcast 25 October 2011.
  4. ^ Agini, Samuel (17 March 2020). "LME to shut down Ring trading after member tests positive for Covid-19". Financial News. Retrieved 5 March 2021.
  5. ^ Burton, Mark; Jack, Farchy (19 January 2021). "London's Raucous Trading Ring Calls Time on 144-Year History". Bloomberg News. Retrieved 5 March 2021.
  6. ^ Desai, Pratima (19 January 2021). "End of an era? London Metal Exchange proposes closure of open-outcry trade". Reuters. Retrieved 5 March 2021.
  7. ^ Partridge, Joanna (8 June 2021). "'Open outcry' trading to restart at London Metal Exchange". The Guardian. ISSN 0261-3077. Retrieved 5 June 2024.
  8. ^ "Archived copy" (PDF). Archived from the original (PDF) on 26 March 2015. Retrieved 31 March 2015.{{cite web}}: CS1 maint: archived copy as title (link)
  9. ^ "LME Select". London Metal Exchange.
  10. ^ "Crisis-hit LME's clearing house names former LSE CFO as chair". Reuters.
  11. ^ "New chairman of LME Clear board". metals-news.com.
  12. ^ "What Is the London Metal Exchange (LME)? Definition and History". Investopedia.
  13. ^ "London Metal Exchange in £1.4bn sale to Hong Kong". BBC. 15 June 2012. Retrieved 7 October 2024.
  14. ^ "London Metal Exchange sued for $456m over cancelled trades". the Guardian. 6 June 2022. Retrieved 21 June 2022.
  15. ^ Smith, Elliot (7 June 2022). "London Metal Exchange hit with two U.S. lawsuits over nickel trading chaos". CNBC. Retrieved 21 June 2022.
  16. ^ "London Metal Exchange sued for $456m over cancelled nickel trades". BBC News. 6 June 2022. Retrieved 21 June 2022.
  17. ^ Onstad, Eric (10 July 2024). "Hedge fund Elliott challenges court verdict it lost against LME on nickel". Reuters. Retrieved 16 August 2024.
[edit]

51°31′16″N 0°5′15″W / 51.52111°N 0.08750°W / 51.52111; -0.08750

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