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Trading of the London Metal Exchange |
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| Release time:2013-05-22 Source:admin Reads: | |
| The London Metal Exchange is the most liquid industrial metals market in the world. More than 80% of global non-ferrous on-exchange business is conducted on its markets, equating to $14.5 trillion, 3.7 billion tonnes and 160 million lots in 2012. Trading on the LME often exceeds world metal production by a factor of 40. Participants including all lines of business such as those who are specialized in metal labels or steel can trade six different types of contract against 11 underlying LME metals on a choice of three platforms. Future LME futures provide members of the metal and investment communities with the unparalleled opportunity to transfer and take on price risk. A futures contract is the obligation to buy or sell a standard quantity of a specified asset (metal) on a set date, at a fixed price agreed today. Our futures are unique and designed to mirror physical trading. Our prompt date structure enables participants to buy and sell futures daily out to three months, weekly out to six months and monthly up to ten years. Thus, members do not have to worry about metal’s quality for the LME has a complete operation process with sound and regulated rules. Participants here will be access to incomparable metals which are widely used and made into products like metal labels, steel, jewelry, etc. Settlement and clearing Futures that are not ‘closed out’ by an opposite sale or purchase are physically settled. All LME futures are settled on the prompt date with initial and variation margins called during the term of a contract. The principles of hedging The LME offers those at all stages of the metals supply chain the opportunity to hedge their price risk and gain protection from adverse price movements. This largely ensures traders, like manufacturers of metal labels or marvelous jewelry, make a deal in a safety environment and will not be affected by criminals playing the market. Hedging is the process of offsetting the risk of price movements in the physical market by locking in a price for the same commodity in the futures market. |
