London Metalexchange(LME for short, full name London Metal Exchange[1]）It is the world's largest non-ferrous metal exchange, established in 1876HKExWholly ownedAffiliated companies[2]。Trading varieties include copper, aluminum, lead, zinc, nickel and aluminum alloys. The price and inventory of the exchange have an important impact on the production and sales of non-ferrous metals worldwide.
The price and inventory of the London Metal Exchange have an important impact on the worldwide production and sales of non-ferrous metals.In the mid-19th century, Britain was the largest tin and copper producer in the worldCountry of production。With the passage of time, industrial demand has been growing, and Britain urgently needs to import a large number of industrial raw materials from foreign mines.From the beginning of this century, the London Metal ExchangePublic releasehisTransaction priceAnd is widely regarded as theguide price。All copper in the worldoutput70% is officially announced by the London Metal ExchangeQuoted priceTrading on a benchmark.
London Metal Exchange, the world's largest metal exchange, will acceptRMBAs a bank andBrokerThe pledge traded on the platform is RMBGlobalization processThe latest step in.LME 2014a turnover15 trilliondollar, the pledge currencies accepted by the Exchange include US dollarseuro、poundandJapanese yen。[3]
On August 27, 2013,Hong Kong Stock ExchangeAnnounced the appointment of Garry Jones as CEO and member of the Board of Directors of the London Metal Exchange.[2]
LME (London Metal Exchange) is actually a world-class metal exchange, dating back to 1877, likeCMESimilarly, it can be said that it has a history of 100 years.The metal trade in London was far earlier than that there. At first, it was copper and zinc, because there wereindustrial revolutionThe demand for metal is very important.MalaysiaCopper and tin fromSouth AfricaThere is a central exchange, which can define the price.In 2010, LME continued to develop. In the past, it completed 103 million transactions, equivalent to 2.8 billion tons of metal, with a reputation value of 11.6 trillion dollars.Average daily LME in the past two or three yearsTrading volumeFaster incrementGlobal financial crisisLater, we saw that the trading volume was increasing, which was very interesting.In 2001 and 2002, there was no economic recession, but the trading volume declined.But as Kiel mentioned earlier, great changes have taken place in the past few years.At the beginning of the recession, we saw more and more demand for commodity exchange and clearing. It can be said that regulatory transparency has increased, not just OTC contracts.See the trading volume of LME, daily average trading volumeYear on year growth18%。LME'smarket shareYes, accounting for 82%, which is allBase metalThe transaction in the transaction.The quantity and share of metal contracts rank second, exceedingNew York Mercantile ExchangeTransaction volume of.
London Metal Exchange[6]
LME is different from many exchanges in terms of market share and open position contracts.FrequentlyHedgingMost of the positions are open positions. The daily trading volume of LME is not very large, and the money invested flows intoBulk commoditiesAs an asset class with metals, it focuses on long-term funds,old-age pensionThe foundation buys metals and holds metals for a period of time. Most businesses are hedging,Real economyConducted.The open position of aluminum is almost 100% in the world. Zinc is lower than aluminum, and copper is the lowest. Copper is also traded in other exchanges.
In the case of non-ferrous metals, LME has introduced long steel bars for construction, which are related to scrap iron and steel bars.Compared with other steel products, the transactions of long steel bars at the beginning of the year, from January to June, were equivalent to US $5.2 billion, and many transactions were completed, equivalent to 140000.Other non-ferrous metals also have some transactions. It can be seen that the long steel bar transaction is relatively successful, and the steel industry, especially the construction industry, uses a relatively high proportion of steel.
In 2021, there were 145 million LME transactions, equivalent to US $15.6 trillion and 3.3 billion tons of nominal transactionsOpen position contract(MOI) up to 2.1 million hands.AsHong Kong Stock ExchangeAs a member of the Group, LME has brought togetherFinancial circlesTo create a stable and regulated market in which there are always buyers and sellers, there are always priceshave a chance toTransfer or take risks - 24 hours a day.[6]
Current leaders
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Matthew Chamberlain, CEO of London Metal Exchange (LME)[10]
On April 21, 2023, the London Metal Exchange (LME) announced that John Williamson, the current non-executive director of LME, would become the temporary chairman of the board of directors of LME, effective from April 28, and would replace Gay Huey Evans CBE.[13]
LME Role
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For LME trading contracts, if you are not familiar with LME, most of the copper contracts are relatively large, which is a little larger than other exchanges.For example, steel, tin and lead are seen in large quantities.Copper was introduced in 1877, which is the largest volume of transactions.The nominal amount of copper is the largest. Although aluminum was introduced in 1978, the actual amount is very large.Nickel was introduced in 1979, with a large scale of silicon.In 2002, a contract, the North American Special Aluminum Alloy Contract, was introduced. In order to benefit the automobile industry in the United States, the contract was mainly delivered in the United States.When considering the launch of new contracts, we must consult with the industry. You may not know that LME is actually a private exchange owned by 80 shareholders, 40% of the members of member companies are brokerage companies, and many financial institutions and banks own LMEs.Members also come from the real economy, such as the manufacturing industry, as well as consumers.Moreover, each technology has a committee. At the committee level, there is a representative from various industries. In addition, representatives of financial institutions, investment enterprises, and metals will discuss every three months to change the contract, which cannot meet the requirements of the industry,It will discuss and improve at the level of the committee and submit it to the Board of Directors for approval.In 2002, I felt that there should be a special contract with aluminum alloy.LME index is the metal index of six major transactions, namely copper, aluminum, zinc, lead and nickel, which are published every day.LME mini contract was launched in 2006, mainly including copper, aluminum and zinc.In 2008, there was a copper billet contract.
This is the introduction of contracts. Among the three LME services, hedging is the most important, especially for China.Hedging is also very important for many years. LME has maintained a long partnership with China's basic trade.The price of LME is used as a benchmark and as a transaction behind the line.Look at the trading platform. LME has three trading platforms, one isElectronic transactions, which will be introduced in detail later.It is open in London time. It starts at 8:00 in China, and ends at 9:00 in winter on trading days until 7:00 p.m. London time.Telephone trading options, as well as large-scale project financing transactions.In front of the over-the-counter transaction, we saw the on-site bidding.Europe has such a way, and CME has such a way in the United StatesFloor trading, is the part of our day trading, because the floor trading is very important, the floor trading, the second section of the morning will set a formal price.
Compared with other exchanges, how to use LME for basic hedging.First of all, LME has no site restrictions, futures positions have no restrictions, and there may be some restrictions on inventory. The position should exceed 50% of the inventory, and certain rules should be followed to ensure that this inventory will not be manipulated.The position of futures is regulated, but there is no limit on the position and the price.There are not many restrictions on prices. Telephone trading is24 hoursMost LME members are brokerage companies, with offices in various cities and time zones, and many brokerage companiesSingapore, Hong Kong and Shanghai all have their own offices. Their time zone transactions will always have a price within 24 hours.We will visit through LME member companies. You do not need to become a member of LME to trade. You must open an account for members to trade through our members.Let's take a look at the growth of electronic trading, because in theAsiaIn terms of the market, it is promoting the development of electronic trading, which is obviously also the global electronic trading market. In terms of Asia, electronic trading can be said to be in the ascendant.With one LMEtrading system , 23% year on year, this is the annualYear on year growth rate。In 2001, it launchedElectronic trading systemThe first few years were not very popular. Since 2008, this electronic trading system has developed rapidly.
Business content
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International membership
LME adopts the international membership system, and more than 95% of the transactions come from overseas markets.Trading varieties include copper, aluminum, lead, zinc, nickel and aluminum alloys.Exchangetransaction modeIt is an open outcry transaction. This transaction is carried out in the "market", also known as "floor trading". It runs for 24 hoursOrder by phoneMarket and LME select screen trading system support.LME publishes a series of official prices every day. These prices are in the industryBe treated asMetalSpot contractBasis of pricing.
Time program
Within each working day, the non-ferrous metal trading time procedures of London Metal Exchange are as follows:Greenwich Mean Time(Greenwich Mean Time, 8 hours difference from China's time, that is, 8 hours added, that isBeijing Time)7：00Market makingAt 11:40 in the morning of the market making, the first trading market began. The eight metals were traded for 5 minutes in turn, and the next trading market was 5 minutes.12: 20. After all eight kinds of metals have been successively traded,Closed market10 minutes.12: At the beginning of the second trading market, each variety is still traded in sequence for 5 minutes.13: 10 At the end of the second trading market, the official quotations of eight metals will be announced and settled.Because the second session in the morning decided the official position of the daySettlement price, so it has a special meaning.13: 15 The official quotation ends and the kerb begins. All eight kinds of metal transactions and LMEX transactions are conducted at the same time.In fact, LMEX's over-the-counter trading is conducted in this interval, that is, the over-the-counter trading time. It does not have its own five minute trading time.During this period, eight metal varieties were traded at the same time.In the morning, after the closing of the OTC market, the trading will be carried out indoors.13: 30 After the kerb transaction ends, the whole morning transaction will be closed and transferred to the electronic trading time.In fact, electronic trading and over-the-counter trading are conducted at the same time, but with different emphasis.The third trading session of the day (afternoon floor trading) on the London Metal Exchange starts at 15:10 p.m.15: 10 15:50 at the beginning of the third trading marketClosed marketAt 15:55 in 10 minutes, the fourth trading market began, and at 16:35, the fourth trading market ended, and the over-the-counter trading (kerb) started at 17:00, and the over-the-counter trading (kerb) ended, and the electronic trading time was transferred.There was no official offer this afternoon.
The second trading of the day on the London Metal Exchange started at 15:10 p.m.The trading mode in the afternoon was similar to that in the morning. After 16:35, the OTC trading was carried out immediately until 17:00, lasting for 25 minutes in total.The difference between the morning and afternoon floor trading is that the afternoon floor trading does not have the important procedure of officially announcing the settlement price.
transaction mode
LME not implementedprice limit 。During ring trading, each commodity will be traded alternately for 5 minutes in each trading market;All metals are traded simultaneously during kerb tradingIndex trading；The other non trading hours (inter office) are electronic disks (24-hour trading).
According to a senior trading source, the London Metal Exchange (LME) may increase the open outcry trading in the morning for its unique futures contracts, because the new shareholders in Hong Kong plan to take this opportunity to deal withShanghai Futures ExchangeCompetition
The introduction of the third earlier trading session will be the biggest change for this 135 year old exchange since it started electronic trading more than a decade ago, which also runs counter to the global trend of electronic trading
Three executives of the trading companies said that the LME Trading Committee had discussed the start time of 'ring' and 'kerb' transactions in London in advance
An executive said: "LME is discussing the early kerb transaction to match the Far East market."
It is not known when LME will make a final decision, but informal negotiations may continue next week. Trading company executives said that the new trading period could be implemented as early as the first quarter
Kerb transaction
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Kerb transaction is also in the trading circleOpen outcryTransaction, but the structure is a little looser than that of the formal intra circle transaction. Brokerage companies canConsignmentwhateverdue dateYou can even allow more than one contractTraderEnter the trading circle or stand behind the seat.(But they still have to stay at their designated positions in the trading circle.) In essence, the purpose of kerb trading is to adjust the position structure that the company failed to complete in the main trading sessions.MorningThe comprehensive transaction starts after the official price of LME is finalized.They can provide very close to the officialprice level Opportunity to close a deal.Accordingly, the afternoon session of consolidated trading allows companies to adjust their respective positions before the end of the day.(It is not the balance of net multiple orders or clearance orders).
Trading procedures
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The first time in the morning The second time in the afternoon
(2 *): OTC trading continued from 16.35 to 17.00.Among them, aluminum alloy and silver ended at 16.45, tin ended at 16.50, zinc and nickel ended at 16.55, and copper and aluminum ended at 17.00.
Major trading metals
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London Copper
LME is the largest in the worldCopper futuresThe trading market, established in 1876, deals in copper, aluminum, lead, zinc, nickel and aluminum alloys.The futures trading of copper began in 1877. There are two types of copper traded:
Negative copper: Grade A copper
Copper bar: Grade A copper with a weight of 110-125kg.
The trading of negative copper is the most active.All copper delivered must haveLondonexchangeThe grade of approved Grade A copper conforms to BS6017-1981.
LME has 14Member companies。Member brokerage companies can operate on their own and also serve customersAgency transaction。Different from other exchanges, LME three-month futures contracts are continuous contracts, so there are daily deliveries. LME is spot copper, that is, cash (CASH) copperDecalThe bottom line has been set,Spot discountIt shall not be less than $30 for March copper, on the contrary,Spot premiumBut it can be infinite.In addition, LME has no price limit.
London Aluminium
Aluminium is second only to steelLarge metal。Because of its light weight, good extensibility and strong corrosion resistance, aluminum is widely used in construction, packaging, electronics and other industries.In 2000, the global aluminum production reached 21191000 tons, and the London Metal Exchange (LME)Aluminium futuresAnd optionsvolume25 million hands (about 600 million tons);From January to July 2001, London Metal ExchangeFutures optionsThe trading volume reached 15170158 lots (about 370 million tons).London Metal Exchange aluminum contract is 99.7%Pure aluminum, 25 tons per hand (+/- 2%), and the minimum fluctuation price of aluminum contract is 50 cents per ton.;
The delivery date is every business day in the last three months and the third Wednesday of each month in the following 12 months.
Acquisition by Hong Kong Stock Exchange
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Hong Kong Stock ExchangeThe acquisition of the London Metal Exchange has been officially completed, and several directors of LME and the parent company have stepped down, while the chairman of the Hong Kong Stock ExchangeZhou Songgang, CEO Li Xiaojia and others will join the management,Hong Kong Securities Regulatory CommissionThe stock allotment plan of Hong Kong Stock Exchange has been approved and the transaction has started.
Suspend nickel trading
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In March 2022, the London Metal Exchange (LME) announced the suspension of trading and modification after Luni's "epic" marketTrading rules。[5]
On the evening of March 8, 2022, the London Metal Exchange said that since 8:15 local time on March 3, nickel in all places of the exchange market will be suspendedContractual transactions。[4]According toReutersLondon reported on March 8 that the price of nickel soared to more than US $100000 per ton on March 8, forcing LME to suspend nickel trading and declare some transactions invalid.[7]
In March 2022, the London Metal Exchange (LME) said that the nickel contract would resume trading on March 16 local time.[8]
On March 16, 2022, the London Metal Exchange (LME) nickel market was reopened for trading, with an opening decline of 12.53% to USD 43995/t.[9]
On May 13, 2022, London Metal Exchange (LME) aluminum inventory will decrease by 6550 tons, nickel inventory will decrease by 234 tons, copper inventory will increase by 125 tons, zinc inventory will increase by 175 tons, tin inventory will increase by 5 tons, and lead inventory will remain flat.Lunjin Institute's aluminum inventory hit a record low.[11]
On June 6, 2022,HKExSaid that its London Metal Exchange (LME) washedge fund Elliott Associates, L.P. and Elliott International, L.Pjudicial review LME once suspended nickel contract transactions in March, with a claim amount of USD 456 million.LMEmanagement layerHe believes that the claim has no legal basis and will actively defend it.[12]
Exchange Events
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In March 2023, according to Bloomberg, the Wall Street Journal and other reports, LME found that 54 tons of "nickel" stored by JPMorgan Chase in a warehouse in Rotterdam was actually just stone.
On May 12, 2023, according to Bloomberg, insiders revealed that after the scandal of replacing nickel in storage with stone in March 2023, the London Metal Exchange (LME) tightened the inspection standards for nickel inventory, and now requires the warehouse company to carry out additional inspection on the guaranteed nickel in storage, including the use of magnets and metal detectors, and the use of touch bags to verify the external materialsSize, shape, etc.[14]
