LME Select provides for all futures and options trading across standard dates, as well as having the capability to develop bespoke "tailor-made" carries for non-standard dates, and to put those in the central order book. Options can be traded either as volatilities in which case the counterparties are given an automatic delta hedge, or, as in premiums, through a specific quote request facility. Each option date has eight strikes at either side of at-the-money (four in the case of traded average price options -TAPOs). In all, LME Select has the capacity to offer more than 7,000 variants of its non-ferrous metals futures and traded options contracts.
Additionally the system gives member firms automatic matching and clearing through an interface with the London Clearing House.
Commenting today LME chief executive Simon Heale said: " The LME is rightly proud of our longstanding methods of trading through the ring and the telephone market, both of which remain available to users of the market and our brokers.
"In LME Select, we now have another trading mechanism of which we can be proud. No one should underestimate just what an outstanding achievement it is for the LME executive and all our member firms to have put this system into operation in under a year from the board's decision to go ahead.
" LME Select is a technologically superb development. Having put in place in record time a cut down version to mark our place in the electronic world, the fully functional Release 2 we have today is quite awesome in its power and reach. It is remarkable to see the way in which a market as complex and subtle as ours can be traded electronically.
" This system gives our member firms the reassurance that whatever way trading develops in the future the LME is able to provide for it seamlessly.
"We have been delighted to announce in recent weeks that the Exchange has received the go-ahead to trade LME Select in Japan and South Africa. Some members have already installed the system in their US offices and are trading from there. We expect to receive regulatory approval from other countries over the next few months.
" The introduction is only the first phase. Now we must ensure that we continue working with our members so that they are able to get the most out of it, and that it becomes the screen trading system of choice in our market. I am sure that alongside the ring and the phone market, LME Select will play a significant and vital part in maintaining our world leading position and our future development."
