In a week that saw the 136-year-old exchange come under scrutiny during a hearing on the role of US holding banks in physical commodities, Alcoa said the LME does not currently do enough to give market participants confidence in the price-setting mechanism of the exchange.
“To this end, it is Alcoa’s view that the LME should establish reporting similar to the CFTC’s Commitment of Traders reports, to improve the understanding in the marketplace of the impact and relative influence that financial investors have on the price-discovery process,” the company said.
“This type of information, and greater transparency, would lead to more clarity on how the rapid growth in speculative trading may be influencing price. Enhancing the availability and quality of information for all physical commodities that underlie a financial market contract will improve the reliability of price discovery in financial markets,” it added.
The company made the comments in a...