The London Metal Exchange (LME) is to introduce market-making programmes to support the launch of new products and enhance liquidity on existing contracts. These are the first programmes of their kind to be introduced by the LME in its 138-year history.

The programmes will provide market makers for the LME’s forthcoming aluminium premium contract and two new ferrous contracts – steel scrap and steel rebar – set for launch on 23 November 2015. The LME is also today announcing a similar market-making programme, coming into effect on 1 October 2015, to boost existing third Wednesday contract liquidity on LMEselect as part of its Liquidity Roadmap initiative.
 
“This is a big step for the LME as we aim to enhance participation on the Exchange and further develop our range of products for global metals traders,” says Matthew Chamberlain (pictured), Head of Business Development at the LME. “These market-making programmes will give our initiatives the best possible start, ensuring they meet the market’s trading and hedging needs from the outset.”
 
This announcement initiates the formal process to appoint market makers. Parties are invited to submit their proposals by 8 September 2015 for the third Wednesday contracts, and 30 September 2015 for the premium and ferrous contracts.
 
To support the launch of the LME’s new products, the Exchange also plans to introduce a fee holiday from the date of the new contracts’ launch until the end of this year. As of January 2016, the new contracts will trade on a competitively priced fee schedule, which the LME has also unveiled today.
The programmes and new products are subject to final regulatory approval from the Financial Conduct Authority and rule change consultations for the LME.