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LME and LME Clear announce 2017 fee schedules

First Published 16th December 2016

Trading and clearing fees unchanged, retaining fee reductions for short-dated carries and position transfer caps. LME Clear warrants as collateral and compression service fees reduced. LME base metals usage licence fee waived for physical market participants.

The London Metal Exchange and LME Clear have announce their 2017 fee schedules. Trading and clearing fees will remain unchanged, including the continuation of fee discounts for short-dated carries and position transfer caps as announced in August 2016. In addition, LME Clear will reduce fees for key services introduced in 2015 and the LME will introduce a waiver for the base metals usage licence fee for physical market participants.

LME Clear will implement a fee reduction for its warrants as collateral and compression services.

"Following discussions with our membership and in line with the recent rebalancing of Exchange fees that took effect on 1 September, LME Clear is pleased to announce this significant reduction in charges for its trade compression and warrants as collateral service," said Adrian Farnham, LME Clear Chief Executive.

Trade compression, which allows members to reduce the notional value of their positions and simplify their portfolio management, will see charges fall by two thirds (from $0.03 to $0.01 per lot compressed). Accommodation charges to use LME warrants as collateral, which provides the LME market with a unique source of protection against risk, will also drop from 50bps to 25bps per year in 2017, with an additional annual cap of $3,000 per member for any related LMEsword fees.

The LME is also introducing a waiver whereby physical market users will not be charged under its base metals market data usage licence. The usage licence, which came into effect on 4 April 2016, was targeted at those users of LME prices who do not contribute to the formation of the prices, either as members or as users of LME client contracts. The LME continues to believe that it is appropriate for financial firms who embed LME prices into structured products to pay for a usage licence. However, following significant industry engagement, the LME also understands that many industrial players, even if they do not directly hedge on the Exchange, materially contribute to the value of LME prices by using them in their supply chains and downstream contracts. Accordingly, such physical users will not be asked to pay for the usage of LME base metals prices in their physical contracts.

All new charges will take effect from 1 January 2017.