The London Metal Exchange (LME)
is the world's leading metal market specializing in non-ferrous base metals
trading. The LME operates successfully with a turnover in excess of US$4,500 billion
and market capitalization of around $3,000 billion annually. It plays an
important part in maintaining the stability of commodity prices throughout the
world.
From January 2000, The London
Metal Exchange Limited became a wholly owned subsidiary of a new company - LME
Holdings Limited. The LME Limited has up to 13 directors and six of them are
the shareholders of LME Holdings Ltd.
Today, the exchange trades in
eight metals, two plastics, and one index that include six primary base metals.
The eight metals contracts are copper grade A, primary aluminium, standard
lead, primary nickel, tin, special high grade zinc, aluminium alloy, and North
American Special Aluminium Alloy (NASAAC). The plastic contracts include
polypropylene (PP) and linear low density polyethylene (LL). Unlike other
markets, trading in the London Metal Exchange is carried out in lots rather
than tones.
The London Metal Exchange carries
three prime roles - hedging, delivery, and pricing. The participants in the
Exchange are protected against risks arising from movements in base metals and
plastic prices, provided with storage and delivery facilities, and presented
with the references prices in the metal and plastic industry for benchmarking.
The LME has three trading
platforms - the open outcry market (ring trading), Inter-office telephone
market, and the LME Select market. During ring trading a small number of
members trade each LME contract in specific 5-minute periods 'rings.' At
present, there are 11 'ring dealers' and they make a significant proportion of
the LME contracts. The Inter-office telephone market is a 24 hour global market
place transacted between member companies over the phone. Whereas, the LME
Select screen trading system is the LME's official electronic trading platform,
where accredited traders execute trades electronically. There are about 100
traders involved in the LME trading.
All LME prices are quoted in US
Dollars, but the LME permits contracts in sterling, Japanese yen, and Euros.
Additionally, the LME provides official exchange rates from US Dollars for each
of the other accepted currencies.
For more information, consult the LME website: