London Metals Exchange Set to Raise Charges as Part of Simplified Fee Schedule

Hong Kong Exchanges and Clearing Limited (HKEx) has announced that its subsidiary, the London Metals Exchange (LME), will be raising fees and charges on a range of tradable products from January 1st, 2015. The average LME transaction fee (including trading and clearing) will increase by 34%.

The new fee schedule provides an “all-in transaction fee” that includes trading and clearing charges priced in a uniform currency – the US dollar. The LME is thereby aligning exchange fees with the traded contracts’ currency.

The LME will charge its ‘Ring’ members 50 cents “per leg per side per lot”, up from the current 38 cents. Members who are not entitled to trade on the floor will pay 90 cents, compared to the current 58 cents. In 2013, the LME transacted approximately 171 million metals futures and options contracts worth an estimated USD $14.6 trillion.

The LME says the new fee schedule is to be introduced to support the ongoing investment programme aimed at transforming the business. Following the purchase of the LME by Hong Kong Exchanges and Clearing Limited (HKEx) in 2012, significant financial commitments were made in the ‘LME’ and ‘LME Clear’ businesses, according to the parent company, HKEx.

If You Build It They Will Come

The LME cites a “changing regulatory environment” which has created tougher reporting requirements and “necessary system upgrades” as the core reasons that require additional investment. The trading venue wants to expand its user base and extend its reach globally.

“Our new tariff is integral to our evolution into a truly commercial global exchange and underpins our continued investment and our next phase of expansion following the successful launch of LME Clear last week,” said Garry Jones, LME CEO and HKEx Co-Head of Global Markets. Adding, “The new LME tariff is competitive and ensures we can continue focusing on innovation and offering users the highest levels of service.”

Charles Li, Chief Executive of HKEx said: “The introduction of a new LME tariff is a necessary step towards realising our vision of building a leading global, vertically integrated multi-asset class exchange group.” Li added, “An increased revenue stream for the LME will deliver better systems, more flexibility for users and more products tailored to meet the changing needs of market users.”