The UK has many peculiarities that contrast with continental Europe. It has its own units of measurement, they drive on the right and futures contracts on the London Metal Exchange (LME) have a duration of three months. Something unique in international financial markets, where they are usually monthly. For the first time in more than 147 years, management will begin offering monthly contracts.
Since its founding in the 19th century, the metal exchange was founded in 1877, The LME’s benchmark contracts operated with a three-month delivery lead timeAt that time, this was the approximate time it took for tin from Malaysia and copper from Chile to reach the UK.
This historical peculiarity has differentiated it from competing markets such as CME Group and Shanghai Futures Exchange, which They concentrate liquidity in monthly contractsand has angered many British customers.
“We have not done a good job with our clients by forcing them into a three-month contract because there is no alternative,” said LME chief executive Matthew Chamberlain. LME will not end three-month contracts for metals trading, but will let clients chooseThe operator expects to record a spike in trading volume with this drop.
The measure is included in the announcement to open the market to small clients electronically. LME will allow trading in blocks of ten lots or less on certain monthly dates, via its computerised system.
The London Stock Exchange aims to phase out the outdated telephone system still used by major investors at its facilities. A large number of transactions are still conducted by telephone and e-mail in this so-called inter-office market.Only 48% of total volumes in 2023 are carried out by computer systems, while competing markets execute operations by computer.
The LME has for years been exploring measures to boost liquidity on its electronic platform, driven by algorithmic market makers that dominate trading on other exchanges. But it has been criticized by some traditional users, who say doing so could endanger the daily trading of contracts that has underpinned the LME’s status as a global price benchmark for more than a century.
Chamberlain said the exchange was “very committed to the physical market”, stressing that the new measures did not involve any change to the LME’s daily pricing structure.
