The London Metal Exchange (LME) is facing pushback from financial industry groups over its proposal to require private deals between members and clients to be executed on its Select trading system. The LME aims to increase transparency and liquidity, but critics argue that the mandate will raise costs and stifle competition. The Futures Industry Association (FIA) and the Association for Financial Markets in Europe (AFME) have voiced concerns, and some LME members have also raised the issue with the UK's Financial Conduct Authority (FCA).
Two financial industry groups have raised concerns with the London Metal Exchange about its plans to require private deals between members and clients to be carried out on its own platform, five sources with knowledge of the matter said.
The Futures Industry Association and the Association for Financial Markets in Europe sent a joint letter to the LME laying out members’ concerns in December.LME brokers typically complain about revenue raising moves such as trading and clearing fee hikes and costs of other requirements such as reporting OTC trades.
The LME said its aim is to increase transparency and liquidity and it welcomed feedback “from all LME stakeholders” on a market structure modernization plan announced in September. Initially the LME published a white paper on its proposals. At that time it had planned only to consult on changes to its Rulebook needed to implement the proposals.
FINANCIAL INDUSTRY LONDON METAL EXCHANGE OTC TRADES COMEX MARKET STRUCTURE MODERNIZATION
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