Young-Jin Chang, global head of metals products at the CME
Of the six London Metal Exchange-traded base metals, the only one not yet traded on the CME is nickel. While demand for a contract in this metal is low and the exchange has no plans to introduce one at this time, it will respond to the market’s changing needs, she said.
“We are always in talks with the market and when there is significant demand out there then we will look at type of products in general whether its nickel, alumina, alloy – all those different things,” she told Metal Bulletin.
Asked if there is the potential to implement a date structure similar as that on the LME, Chang said it has no plans at this time but again it would respond to demand from clients.
“We focus on the value that we can provide to the client and not so much doing what others are doing. If this is something the market needs – if it’s not efficient today – then, if we can make it efficient, we will trade,” she said.
The CME has reported a strong year-to-date performance in metals, which were the fastest growth asset class this year – volume is up 29% in the year to date.
“[The CME is] taking on a rapidly changing market,” Derek Sammann, CME senior md, global head of commodities & options products, said at a press conference earlier this week, adding that the industrial metals community had come to the exchange.
“[The community] said ‘help us build the products and help deliver risk management capabilities that we are not getting right now’,” Sammann said.
Part of the reason for the exchange’s success over the past two years has been the strengthening of its relationship with clients, Chang added.
“[This is] not just on the meetings but also delivering on the promises and showing you listen and you care and you are delivering that… the market has seen the track record that we are building,” she said.
“The conversation with CME with some of the engagement has been of educating and PR and [has] come such a long way in terms of our partnership in the market,” she added.
Increased activity in Asia has bolstered CME volumes while open interest (OI) has also been strong, particularly for copper – it posted 18 consecutive record numbers this year.
But copper OI on the CME in the third quarter was down 6.2% year-on-year. Chang attributed this to seasonal trends, with market risk profiles regularly changing.
“In the first quarter we see OI going up and that drops at the end of the year as some of the hedging volumes finishes at the end of the year. Sometimes, the leg they tend to do is three-month, six-month, twelve-month so you see some of that dropping out on a quarterly basis as offline [in the] fourth quarter and online in the first,” she said.
This article was first published on www.fastmarkets.com