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The London Metal Exchange (LME) is taking steps to boost liquidity on its traded options market, increasing the transparency of data reporting and providing greater protection for participants placing large options orders on the Exchange.
The LME plans to enrich published data for matched traded options to provide greater granularity, and the Exchange’s detailed reports on options will be expanded to include the expiry date, premium and type of option. The LME will also increase the number of times its matched trades report is released throughout the day to allow more comprehensive analysis of daily volumes.
“The LME is looking to increase liquidity on its traded options market, and the changes we are announcing today are designed to encourage more over-the-counter business to be brought on-exchange,” says Peter Childs, Head of Trading Operations and Price Discovery.
In response to feedback from the LME’s Traded Options Committee, the LME also plans to defer publication of all options trades of 100 lots for two business days from the date they were transacted. The LME currently publishes matched options trades daily, and market participants have expressed concern that this could expose liquidity providers to undue risk.
These enhancements to the LME’s post-trade transparency for traded options will become effective from 8 February 2016.
