London Metal Exchange May Add More Industrial Metal Swaps

The London Metal Exchange is considering adding industrial metal swaps settled against various periods, in addition to the monthly ones which were introduced today.

Swaps for aluminum, two aluminum alloys, zinc, tin, nickel, copper and lead, were made available on the LME today, the exchange said in a statement. None of them have been traded on the exchange’s LMESelect electronic platform yet, according to Chris Evans, head of business development.

The swaps will be settled in cash against the monthly average settlement price based on a calendar month. The exchange may also introduce swaps settled against the average prices for a non-calendar month, Evans said.

“As we expand our scope in clearing, that would be a product that we would look at,” Evans said by phone in London today, adding there were no immediate plans for the expansion. The LME is “researching” introducing steel billet swaps, he said.

The swaps will be traded on LMESelect and the telephone and cleared by LCH.Clearnet Group, which handles other LME contracts.

The swaps “have been launched in response to the push from regulators to get over-the-counter swaps done through clearing,” Evans said.