The $1 per lot fee is designed to rebalance the disparity
between the cost of trading on-exchange and in the OTC market.
It will also preserve the rights of the single-dealer platforms that have become so popular with clients of several banks and brokers, while requiring multi-dealer platforms to secure the appropriate LME authorization.
The latter is a compromise that the LME no doubt hopes will satisfy the likes of JP Morgan and Goldman Sachs, which will face a quarterly bill from the exchange for their previously cheaper OTC client trades.
The trade-off for these participants is that their hugely successful single-dealer platforms have been described by the exchange as a “key element” of the LME ecosystem. At the same time, member views that third-party multi-dealer platforms could fragment liquidity and threaten the exchange’s commercial interests have been recognized.