HOTTER ON METALS: Looking for (LME) options

The London Metal Exchange is looking for ways to boost its options market, which has been struggling for some years to replicate the growth seen in the same sector among its peers.

The exchange has launched a consultation, scheduled to end on July 29, on developing electronic options via a new trading platform while retaining its current inter-office options trading structure.
Items up for discussion include the format of the options quotation, expiry and closing price processes, strike listing rules and tick sizes. The exchange is also looking for views on liquidity provider programs and block rules, as well as on the potential introduction of new shorter-dated options contracts.
This is long overdue; the revitalizing of options is something that the LME has been talking about for several years.
Trading
To be fair, the lack of growth can partly be attributed to a change in the nature of trading. There are very few aggressive traders who will pay spreads and put trades on, and this overall lack of willingness to assume risk has made business harder.

A decade ago, a market participant...

Published

Andrea Hotter

July 02, 2020

15:40 GMT

New York