London Metal Exchange
The London Metal Exchange or LME is the world's largest market in cash and futures in base and other metals. It offers hedging, worldwide reference pricing and storage for physical delivery of trades.It is located at 56 Leadenhall Street, London.
The London Metal Market and Exchange Company was founded in 1877 but the market traces its origins back to 1571 and the opening of the Royal Exchange. At first only copper was traded, lead and zinc were soon added but only gained official trading status in 1920. The exchange was closed over WW II and did not re-open until 1952. Other metals traded extended to include aluminum (1978), nickel (1979), aluminum alloy (1992), and silver (1999). Base metals are traded through LMEX since 2000. The total value of the trade is around $2,000 billion annually.
There is constant inter-office trading through the London Clearing House but some trading is still done by open outcry in the Ring. There are a morning and an afternoon trade, where each of the eight metal contracts are traded in two blocks with a five minute session for each contract (the sessions last from 11.40 until 13.15 and from 15.10 unitl 16.35, each session includes a ten minute break). The second trading block in the morning is key to setting the Daily Official Exchange rates. After the official trades there is fifteen minutes of "kerb" trading. Trades are in futures, options and TAPOs (traded average price contracts, a form of Asian option).
There are twelve companies who have exclusive rights to trade in the Ring and around 100 companies involved in the LME in total.
Contrary to popular belief, the precious metals, gold and silver are not traded by the LME, but by the London Gold Market, actually by the members of the London Bullion Market Association.
