The potential enhancements include:
- a greater frequency of prompt dates for the nearby month, and;- an extension of the material shelf-life beyond the current term of 10 months.
In addition, the Exchange’s commitment to further expanding its suite of plastics futures contracts continues with ongoing research into LME plastics contracts such as PVC and PET.
Commenting on the announcement, Neil Banks, Director of Exchange Development said:
“The introduction of these proposals, if approved, will help prices to better reflect the spot market. They will also aid stock financing and warrant swapping and therefore support the growth of liquidity in the contracts.
As with all LME contracts, and working with the various LME committees, we constantly review all specifications to ensure they meet the needs of industry and make recommendations for future improvements as necessary.”
Background:
- The LME commenced trading in polypropylene and linear low density polyethylene futures contracts on 27th May 2005 - The LME is the world’s premier non-ferrous metals market.
- The LME turned over 78 million lots in 2005, which equates to around $4,500 billion dollars.
- Trading at the LME takes place through open outcry in ‘the ring’, through an inter-office telephone market and through LME Select.
- In October 2005, the LME announced a licensing agreement with the Multi Commodity Exchange of India (MCX) who will initially use LME prices to settle MCX contracts for aluminium, tin and nickel.
- The LME announced its intention to develop risk management tools for the steel industry in October 2005 and is now beginning to short-list the price compilers who could work with the Exchange to develop and publish LME steel reference prices.
