LME: Record H1 Trading; Now Targets Asia

Source:

"LME is looking at introducing a registered warehouse in Taiwan."

Buoyed by record trading volumes in H110, the London Metal Exchange outlined plans to attract more Asian business and improve its warehousing systems.

The LME's total trading volumes jumped 7.5% in H110 to more than 59 million lots, Chief Executive Martin Abbott said.

"The first half has been a good six months," Abbott said. It's been a good first half, with good solid performance."

Among the contracts showing the highest volume growth in 2010, copper futures and options trading grew 20.4% to 16,338,186 lots in H110.

Having formally opened a Singapore office three weeks ago, the LME is in negotiations with the Singapore Exchange (SGX) to set up "mini LME contracts" for early next year.

"The rationale behind this is that we believe there is a retail market available in Asia," Abbott said, adding the full plans would be announced in the next few weeks and a launch in H111 was the target.

"Our wholesale market is not ideally placed to capture that business," he said. "Mini contracts, cash settled and traded locally. . .will not be restricted simply to Singapore."

Abbott also said that the LME was looking to introduce early morning electronic Asian benchmark contracts, which would trade around the end of the main Asian day.

"We think there is enough flow, certainly in our larger contracts, for us to derive a benchmark," he said. "There would be no settlement against that benchmark—it would simply be a number, but a number we think would be relevant and useful."

Abbott confirmed that the exchange was looking at introducing a registered warehouse in Taiwan.

"We may not make it within calendar 2010, but certainly there is currently a very serious project under way to be able to list Taiwan as a delivery point for our metals," he said.

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