London Metal Exchange further advances market structure modernization.

In order to improve liquidity, the London Metal Exchange (LME) is further advancing its market structure modernization plan, which includes: the release of consultation opinions on large trades threshold and cross-market trading rules to enhance market liquidity, transparency, and pricing competitiveness; after extensive communication with members and market participants, the implementation plan for market structure modernization has been refined and will be phased in; physical market protection and the date structure of LME daily settlements are ensured through detailed exemptions and fee-related measures; the implementation of the market structure modernization plan is supported by liquidity provider programs and new trading platform features; adjustments to fee balance related to on-exchange (ETD) and off-exchange trading (OTC). Today (April 30th), LME announced the follow-up steps for the implementation of measures outlined in its September 2024 "Enhanced Liquidity White Paper" (referred to as the "White Paper"). The White Paper proposes a series of draft reform measures aimed at modernizing LME market structure, enhancing transparency, improving price competitiveness, while also protecting the unique function of LME in serving the physical metal market. Since the release of the White Paper, LME has engaged in extensive communication with members and a broader range of market participants, and has developed more detailed plans to support these proposals. This includes over 150 meetings with members, clients, major industry bodies, LME committees, and working groups. These discussions have provided the basis for the plans announced today. The first phase of reform measures will continue to be implemented in the first half of 2025 and 2026, with further measures considering starting in the second half of 2026. First Phase Today, LME is seeking market feedback on draft proposals for the introduction of large trades threshold and cross-market trading rules, aimed at promoting transparency and pricing competitiveness of LME's electronic trading platform, LMEselect. Through discussions with a series of technical working groups, LME has refined its initial proposals and now proposes adding certain exemptions to ensure members can still guarantee closing price orders for clients and introducing automated cross-market trading solutions to reduce operational complexity and ensure the best trading experience for clients. LME also proposes calibrating bulk trading thresholds for each metal based on quantitative analysis to accurately reflect the characteristics of each metal contract. To support the spot market and the date structure of daily settlements, LME proposes further extending the bulk trade exemption rules outlined in the White Paper. Additionally, to support continuous liquidity provision in the market and daily contract trading, LME proposes temporary adjustments to the definition of short-dated carry in the next year. This can reduce trading costs for clients engaging in certain date carry trades between offices or on LMEselect. Following detailed discussions with market users, LME currently does not intend to apply large trade rules to off-exchange lookalike contracts, but if market monitoring shows that on-exchange control measures lead to more trading off-exchange (OTC), LME will advance this proposal. LME proposes balancing the on-exchange and off-exchange markets, creating a fair competitive environment by increasing the financial OTC booking fee for similar trades. This helps incentivize price formation and market integrity. Other upcoming reform measures include the electronic market maker program and new LMEselect features, including optimizing minimum price units and introducing settlement price trading for major contracts (TAS). Second Phase As part of the second phase, LME plans to increase transparency for all inter-office trades aimed at transferring risk on the LME core market data source, further enhancing market transparency and fairness. LME will also continue to increase transparency by publishing off-exchange trading data and open interest data. Additionally, LME will continue to introduce new LMEselect features, such as improving implied pricing and preventing self-trading, to support enhanced liquidity measures. Next Steps The market opinion consultation released today will end on June 13, 2025, and LME encourages all relevant parties to provide feedback. LME CEO Matthew Chamberlain said, "We greatly appreciate everyone's active involvement in our proposals. We have carefully listened to this feedback, allowing us to refine the details to better meet the needs of different customer groups. Considering the operational complexities that need to be managed by market participants to support these new measures, we will implement these reform steps in stages." Chamberlain added, "I believe that through collaboration with market participants, we have identified a series of reform measures. These measures will build a more modern market structure, enhancing transparency and pricing competitiveness, while protecting the physical market and benefiting all market participants."