LME ELECTRONIC TRADING: Our route to ramped-up monthly liquidity – LME’s Matt Chamberlain

The LME's objective is to capture the potential of monthly-date trading without disturbing its market structure, says Matt Chamberlain, the exchange's head of business development.

The London Metal Exchange is a forwards market. At its core is a daily settlement date structure, coupled with its physically settled product suite – these have made the LME market unique for 138 years, and will continue to do so. That said, like any other business, we must seek growth. Our data shows that two-thirds of open interest on the LME lies on third-Wednesday settlement dates, which on our market is the convention for “monthly” contracts. This suggests there is healthy demand for exposure to monthly dates. But on our electronic platform, LME Select, liquidity is concentrated on the rolling three-month forward date. The monthly third-Wednesday dates do not show liquid bids and offers, so our users cannot see displayed pricing for those dates. It is unusual for an exchange not to offer displayed pricing on the dates where most of its users want exposure. And the idea of...

Published

March 11, 2015

12:40 GMT

London