Brno, Czeck Republic, June 2011

The London Metal Exchange ( LME) is one of the World’s oldest metals markets enjoying a long history that can be traced to the opening of the Royal Exchange in London in 1571. Copper and Tin have been traded on the LME since its very beginnings while Lead and Zinc were introduced in the early 1900’s and more recently; Aluminium, Nickel, Aluminium alloy, cobalt and other metals and contracts have also been added: Trading on the LME – CTRM Software Challenges.

The long history of the LME is reflected in some of the instruments and trading options offered through the exchange including the 3-Month date as the reference price. This construct dates back to the opening of the Suez Canal in 1869 when the delivery time for both Tin from Malaysia and Copper from Chile took around three-months. The LME still has a unique trading system of daily trading dates for up to 3-Months as a result, followed by weekly and monthly prompt dates.

By virtue of its structure and history, the LME has some unique constructs and issues that can face traders and the trading & risk management systems used by those who wish to utilize its services.

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Prepared by CommodityPoint