London Metal Exchange
The London Metal Exchange (LME) is the world's premier non-ferrous metals market, with highly liquid contracts. It is highly successful, with a turnover value of some USD 2,000 billion per annum. An international market, located in London, for the trading of non-ferrous metals, namely copper, primary aluminium, aluminium alloy, lead, nickel, tin and zinc, primarily for industrial use. Its prime function is hedging with 70-80% of turnover originating from trade clients. Other dealings include futures and options contracts and arbitrage trading. The London Clearing House (LCH) acts as guarantor to trades conducted between Clearing Members. The LME is a Recognised Investment Exchange (RIE), regulated by the Financial Services Authority (FSA).
The origins of the London Metal Exchange can be traced as far back as the opening of the Royal Exchange in 1571. This is where metal traders first began to meet on a regular basis. However, it was in 1877 that the London Metal Market and Exchange Company was formed as a direct result of Britain's industrial revolution of the 19th century. This led to a massive increase in the UK's consumption of metal, which required the import of enormous tonnages from abroad.
The primary roles of the LME are:
- Hedging
Providing a market where participants, primarily from non-ferrous base metals-related industries, have the opportunity to protect against risks arising from movements in base metals prices.
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Pricing
Providing reference prices which are accepted globally and widely used in the non-ferrous metals industries for benchmarking.
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Delivery
Providing for appropriately located storage facilities to enable market participants to make or take physical delivery of approved brands of LME traded metals.
The Exchange has developed standardised contracts which assume that on falling due they will result in metal either being delivered or received. All the trading associated with the Exchange means that the market is highly liquid, transparent and the prices published are seen as a true reflection of demand and supply by trade and industry. The LME provides an outstanding service to industry through its activities and has a great responsibility because of its pre-eminence in this field.
Contact details
London Metal Exchange
56 Leadenhall Street
London EC3A 2DX
Tel: 020 7264 5555
Fax: 020 7680 0505
www.lme.co.uk