LME proposals will weaken link to physical market, lead to price distortions, trade exec says

Key proposals in the London Metal Exchange's discussion paper will likely weaken the link between metals pricing and the physical market and lead to price distortions, the president of Hong Kong-based trader Global Metals Network Ltd said.

These proposals include the permanent closure of the LME ring, the incentivization of electronic trading and a switch in margin methodology, Mark Sellier said during a webinar hosted on Thursday March 11 by the Bureau of International Recycling.
Sellier said he does not believe a change to a Realized Variation Margin (RVM), which pays profits on a trade-date-plus-one basis, from a Discounted Contingent Variation Margin (DCVM), which realizes forward profits on the settlement date, will be welcomed by the trade and industry.

“For the most part, I don’t know too many people in the trade, in the physical...

Published

Andrea Hotter

March 11, 2021

22:42 GMT

New York