London Metal Exchange#Markets

{{Infobox organization

| name = London Metal Exchange

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| image = LME entrance sign.jpg

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| formation = {{start date and age|1877}}

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| purpose = Trading in metals and metals-related contracts

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| owner = Hong Kong Exchanges and Clearing

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The London Metal Exchange (LME) is a futures and forwards exchange in London, United Kingdom with the world's largest market{{cite web |url=https://www.reuters.com/markets/europe/clear-street-seeks-join-london-metal-exchanges-open-outcry-trading-floor-source-2024-09-25/|title=Clear Street seeks to join London Metal Exchange's open-outcry trading floor, source says|publisher=Reuters }} in standardised forward contracts, futures contracts and options on base metals. The exchange also offers contracts on ferrous metals and precious metals.{{cite web |title=Forward & Futures Contract Specifications |url=https://www.lme.com/en-gb/metals/non-ferrous/aluminium/contract-specifications/futures/ |publisher=London Metal Exchange |access-date=7 August 2015 |archive-date=4 March 2016 |archive-url=https://web.archive.org/web/20160304040533/https://www.lme.com/en-gb/metals/non-ferrous/aluminium/contract-specifications/futures/ |url-status=dead }} The company also allows for cash trading. It offers hedging, worldwide reference pricing, and the option of physical delivery to settle contracts.

Overview

=Ring trading=

Trading times are 11:40 to 17:00.{{cite web |author= |date= |title=The Ring |url=https://www.lme.com/en/trading/trading-venues/the-ring |website= |location= |publisher=London Metal Exchange |access-date=2025-04-08}}

The LME is the last exchange in Europe where open-outcry trading takes place.BBC Radio 4 Today, broadcast 25 October 2011. The ring was temporarily closed in March 2020 due to the COVID-19 pandemic.{{cite news |last1=Agini |first1=Samuel |title=LME to shut down Ring trading after member tests positive for Covid-19 |url=https://www.fnlondon.com/articles/lme-to-shut-down-ring-trading-after-member-tests-positive-for-covid-19-20200317 |access-date=5 March 2021 |work=Financial News |date=17 March 2020}} In January 2021, LME proposed closing the ring, Europe's last open-outcry trading floor, and moving permanently to an electronic system.{{cite news |last1=Burton |last2=Jack |first2=Farchy |first1=Mark |title=London's Raucous Trading Ring Calls Time on 144-Year History |url=https://www.bloomberg.com/news/articles/2021-01-19/london-metal-exchange-to-propose-closing-trading-ring-for-good |access-date=5 March 2021 |work=Bloomberg News |date=19 January 2021 |language=en}}{{cite news |last1=Desai |first1=Pratima |title=End of an era? London Metal Exchange proposes closure of open-outcry trade |url=https://www.reuters.com/article/uk-lme-trading/end-of-an-era-london-metal-exchange-proposes-closure-of-open-outcry-trade-idUSKBN29O1MP |access-date=5 March 2021 |work=Reuters |date=19 January 2021 |language=en}} However, the ring reopened in September of the same year after resistance from members.{{Cite news |last=Partridge |first=Joanna |date=2021-06-08 |title=‘Open outcry’ trading to restart at London Metal Exchange |url=https://www.theguardian.com/business/2021/jun/08/open-outcry-trading-to-restart-at-london-metal-exchange |access-date=2024-06-05 |work=The Guardian |language=en-GB |issn=0261-3077}}

In addition to the 9 companies that have exclusive rights to trade in the ring, around 100 companies are involved in the LME in total.

=Precious metals=

The LME used,{{Cite web |url=https://www.lme.com/~/media/Files/Notices/2014/2014_09/14%20269%20A261%20Precious%20Metals%20Price%20Data%20and%20Matching%20and%20Clearing%20Services.pdf |title=Archived copy |access-date=2015-03-31 |archive-url=https://web.archive.org/web/20150326003035/http://www.lme.com/~/media/Files/Notices/2014/2014_09/14%20269%20A261%20Precious%20Metals%20Price%20Data%20and%20Matching%20and%20Clearing%20Services.pdf |archive-date=2015-03-26 |url-status=dead }} however, to provide trade matching and clearing services to the London bullion market and distributes gold, silver, and gold IRS (interest rate swaps) forward rates on behalf of the LBMA.

=Electronic trading=

The LME launched an electronic platform called LME Select launched in February 2001.{{cite web |title=LME Select |url=https://www.lme.com/Trading/Systems/LMEselect |access-date= |publisher=London Metal Exchange}} This was developed by a Swedish software house Cinnober. The platform is a FIX-based trading platform, and now handles a majority of the total LME business.

=LME Clear=

LME Clear is the clearing house for the London Metal Exchange. Launched in 2014 it was designed and built in consultation with the market to provide cost-efficient, EMIR compliant clearing and settlement services, using cutting-edge technology. LME Clear has announced the appointment of David Warren as Chairman effective July 20, 2023. David will succeed Marco Strimer, who will step down as chairman at the end of his term of office.{{cite web |title=Crisis-hit LME's clearing house names former LSE CFO as chair|url=https://www.reuters.com/world/uk/crisis-hit-lmes-clearing-house-names-former-lse-cfo-chair-2023-07-05/ |access-date= |publisher=Reuters}}{{cite web |title=New chairman of LME Clear board|url=https://metals-news.com/breaking-news/new-chairman-of-lme-clear-board// |access-date= |publisher=metals-news.com}}

History

LME can trace its history to metals trading in Royal Exchange, London.{{cite web |url=https://www.investopedia.com/terms/l/londonmetalexchange.asp|title=What Is the London Metal Exchange (LME)? Definition and History|publisher=Investopedia }}

It was purchased by Hong Kong Exchanges and Clearing in 2012.{{cite news |author= |date=15 June 2012 |title=London Metal Exchange in £1.4bn sale to Hong Kong |url=https://www.bbc.com/news/business-18455901 |work=BBC |access-date=7 October 2024}}

In March 2022, LME was sued by Elliott Management, an American hedge fund. The hedge fund sued for $456 million, claiming that LME acted "unreasonably and irrationally" when it canceled nickel trades made on March 8, 2022.{{Cite web |date=2022-06-06 |title=London Metal Exchange sued for $456m over cancelled trades |url=https://www.theguardian.com/business/2022/jun/06/london-metal-exchange-sued-cancelled-trades-elliott-management |access-date=2022-06-21 |website=the Guardian |language=en}} Jane Street Global Trading also sued LME for $15.3 million over its cancelled nickel trades in March.{{Cite web |last=Smith |first=Elliot |date=2022-06-07 |title=London Metal Exchange hit with two U.S. lawsuits over nickel trading chaos |url=https://www.cnbc.com/2022/06/07/london-metal-exchange-hit-with-two-us-lawsuits-over-nickel-trading-chaos.html |access-date=2022-06-21 |website=CNBC |language=en}} Both lawsuits were filed in the High Court of Justice.{{Cite news |date=2022-06-06 |title=London Metal Exchange sued for $456m over cancelled nickel trades |language=en-GB |work=BBC News |url=https://www.bbc.com/news/business-61701238 |access-date=2022-06-21}} In November 2023, the court ruled in LME's favor, with Elliott and Jane Street appealing the decision to the Court of Appeals.{{cite news |last1=Onstad |first1=Eric |title=Hedge fund Elliott challenges court verdict it lost against LME on nickel |url=https://www.reuters.com/markets/commodities/hedge-fund-elliott-challenges-court-verdict-it-lost-against-lme-nickel-2024-07-09/ |access-date=16 August 2024 |work=Reuters |date=10 July 2024}}

In March 2025, the Financial Conduct Authority fined the London Metal Exchange £9.2m after it failed to prevent extreme volatility in the nickel market in March 2022.{{Cite web |last=Gulliver-Needham |first=Elliot |date=2025-03-20 |title=FCA fines London Metal Exchange £9.2m over 2022 nickel volatility |url=https://www.cityam.com/fca-fines-london-metal-exchange-9-2m-over-2022-nickel-volatility/ |access-date=2025-03-20 |website=City AM |language=en-GB}}