Contract Specifications

2 Overview

4 Futures

10 TAPOs (Traded Average Price Options)

11 Traded options

12 LMEminis

1

Contents

The London Metal Exchange (LME) is the world’s premier industrial metals

market – more than two thirds of global non-ferrous futures and options

trading is conducted on the LME. The price derived from trading is used

as a reference price in the majority of the world’s physical metal markets.

Located in the City of London, the LME’s membership is global, with more

than 95% of the business conducted on its markets coming from outside

the United Kingdom.

The Exchange provides three core services which underpin all activity;

• Pricing

• Hedging

• Physicaldelivery(theLMEactsasamarketoflastresort)

The market itself can be accessed via three different trading platforms, the

Ring (open-outcry), LMEselect (electronic trading) and through 24-hour

inter-office telephone trading.

Overview

Daily prompt dates Weekly prompt dates Monthly prompts to 12, 15, 27, 63 or 123 months

Cash 3 months 6 months

LMEminis Tin, Molybdenum,

Cobalt & Steel Billet

Aluminium Alloy &

NASAAC

Lead, Nickel & Zinc

Aluminium& Copper

12 15 27 63 123

The LME’s physical delivery model allows the Exchange to offer a unique prompt date structure for futures contracts

which matches the requirements of physical industry for the pricing of physical material. A summary of this is shown below.

(1) Weekly contract settlement takes place every Wednesday

(2) Monthly contract settlement takes place every third Wednesday

LME Aluminium and LME Copper Daily: Cash to 3 months

Weekly (1): 4 months to 6 months

Monthly (2): 7 months to 123 months

LME Lead, LME Nickel and LME Zinc Daily: Cash to 3 months

Weekly (1): 4 months to 6 months


LME Aluminium Alloy and Daily: Cash to 3 months

LME North American Special Weekly (1): 4 months to 6 months

Aluminium Alloy Contract (NASAAC) Monthly (2): 7 months to 27 months

LME Tin, LME Molybdenum, Daily: Cash to 3 months

LME Cobalt and LME Steel Billet Weekly (1): 4 months to 6 months


LMEminis Monthly (2): Monthly to 12 months

Prompt date/settlement (delivery) date summary for LME contracts

2

How do I access the market and trade on the LME?All trading on the LME takes place through LME member firms which include

the world’s leading financial institutions and physical trading companies.

Members are divided into specific categories, each with different privileges

(only category 1, 2 and 4 members are allowed to issue LME contracts, for

example). LME members buy and sell contracts on behalf of their customers

via the Exchange’s three trading platforms – the Ring, LMEselect and

inter-office telephone trading.

As a ‘principal-to-principal’ market, participants can only begin to trade and

access the LME’s delivery mechanism once an account with an LME member

firm has been opened and approved (subject to due diligence, Financial

Services Authority checks and specific trading requirements).

A full list of our members is available at www.lme.com/membership.

Further information regarding the Exchange, its contracts, services,

educational courses, data and latest news and events can be found

at www.lme.com.

3

Futures Non-ferrous

QuotationUS dollars per tonne

Clearable currenciesUS dollars, Japanese yen, Sterling, Euro

Minimum price movementRing Outright $0.50* Carries $0.01

LMEselect Outright $0.25* Carries $0.01

Inter-office Outright $0.01 Carries $0.01

*Minimum price movement for LME Nickel and LME Tin for outright

on the Ring is $5.00 and on LMEselect is $1.00

LME Aluminium

Contract

Primary aluminium with impurities

no greater than in the registered

designation P1020A in the North

American and International

Registration Record entitled

“International Designations and

Chemical Composition Limits for

Unalloyed Aluminium” (revised

March 2007)

Contract/quality

25 tonnes (with a

tolerance of +/- 2%)

Lot size (warrant)

Ingots, T-bars, Sows

Form/shape

First prompt date is TOM which is the

next business day from today. The Cash

prompt date is two business days from

today followed by other daily prompts

up to three months. TOM, CASH and 3

MONTH prompts roll on a daily basis.

Weekly prompts on every Wednesday

of the month from 3 months to 6

months. Monthly prompts on every

third Wednesday from 7 months to

123 months.

Delivery/settlement dates

4

LME Aluminium Alloy

LME Cobalt

Contract

Aluminium alloy conforming to

A380.1, 226 or AD12.1

A minimum of 99.30% purity.

Other elements are as specified

by producers of each brand in the

LME approved list

Contract/quality

20 tonnes (with a


1 tonne (+/-2%)

Lot size (warrant)

Ingots, Small Sows,

Large Sows, T-bars

Cathodes (broken

or cut), Rounds,

Briquettes, Ingots

Form/shape









months. Monthly prompts on every third

Wednesday from 7 months to 27 months.











Delivery/settlement dates

LME Copper Grade A Copper conforming to

BS EN 1978:1998 (Cu-CATH-1)

25 tonnes (with a


Cathodes First prompt date is TOM which is the








months. Monthly prompts on every

third Wednesday from 7 months to

123 months.

5

LME Nickel

LME Lead

LME Molybdenum

Nickel of 99.80% purity (minimum)

conforming to B39-79 (2008)

Lead of 99.97% purity (minimum)

conforming to BS EN 12659:1999

Between 57 and 63%

molybdenum contained in roasted

molybdenum concentrate (RMC)

with maximum permissible

impurities of Cu 0.50%;

P 0.05%; Pb 0.05%; S 0.10%;

C 0.10%; H2O 0.1%

6 tonnes (with a


25 tonnes (with a


6 tonnes

molybdenum

(+/-5%) contained

in 10 tonnes of RMC

Full Plate Cathode,

Cut Cathodes,

Pellets, Briquettes

Ingots

Powder packed

in drums































Contract Contract/quality Lot size (warrant) Form/shape Delivery/settlement dates

FuturesNon-ferrous

6

LME North American Special Aluminium Alloy Contract (NASAAC)

LME Tin

LME Zinc

Aluminium alloy conforming to

the “LME NA380.1” specification

(an LME modification of The

Aluminium Association Inc. A380.1

specification (1989)

Tin of 99.85% purity (minimum)


Zinc of 99.995% purity (minimum)


20 tonnes (with a


5 tonnes (with a

tolerance of +/-2%)

25 tonnes (with a


Ingots, Small Sows,

Large Sows, T-bars

Ingots

Ingots































Contract Contract/quality Lot size (warrant) Form/shape Delivery/settlement dates

7

FuturesLME Steel Billet

QuotationUS dollars per tonne

Clearable currencyUS dollars

Minimum price movementRing Outright $0.50 Carries $0.01

LMEselect Outright $0.10 Carries $0.01

Inter-office Outright $0.01 Carries $0.01

LME Steel Billet

1 0.08-0.13 0.10-0.30 0.30-0.60 0.05 0.04 0.40 0.20 0.20 0.012 –

2 0.10-0.15 0.15-0.30 0.50-0.80 0.045 0.045 0.40 0.20 0.20 0.009** –

3 0.14-0.22 0.05-0.15 0.40-0.65 0.05 0.04 0.40 0.30 0.30 0.012 –

4 0.14-0.22 0.15-0.30 0.40-0.65 0.05 0.04 0.40 0.30 0.30 0.012 –

5 0.15-0.22 0.15-0.30 0.60-1.00 0.05 0.05 0.50 0.20 0.20 0.012 0.50

6 0.17-0.25 0.40-0.80 1.20-1.60 0.045 0.045 0.50 0.20 0.20 – 0.52

7 0.28-0.37 0.05-0.15 0.50-0.80 0.05 0.04 0.40 0.30 0.30 0.012 –

8 0.28-0.37 0.15-0.30 0.50-0.80 0.05 0.04 0.40 0.30 0.30 0.012 –

9 0.36-0.42 0.15-0.30 1.00-1.40 0.05 0.05 0.50 0.20 0.20 – –

Contract

LME Grade C (%) Si (%) Mn (%) S (%) P (%) Cu (%) Ni (%) Cr (%) N (%) CEV*

65 tonnes (with

a tolerance of

+/- 3.5%)

Billet:

100mmx100mm

120mmx120mm

125mmx125mm

130mmx130mm

140mmx140mm

150mmx150mm

Lot size (warrant)

5,800mm – 6,000mm (+/-100mm)

11,700mm – 12,000mm (+/-100mm)

Lengths Delivery/settlement datesForm/shape











All limits are max unless otherwise indicated.

*CEV (Carbon Estimated Value) = %C + %Mn/6 + (%Cr + %Mo + %V)/5 + (%Cu + %Ni)/15

**%Nmaxmayincreaseby0.001%forevery0.005%reductionin%P

8

Setting theGlobal Standard

9

TAPOs (Traded Average Price Options)

Option typeAsian option

Last trading dayBusiness day preceding the declaration day for that option

before 18.00 (UK time)

Last matching and registration18.15 on the last trading day of the option

Declaration day/timeThelastbusinessdayoftheTAPOmonthat15.00(UKtime)

Premium tick size$0.01

Minimum strike price movement$1.00

Exercise of the optionAutoexercisebyLCH.ClearnetbasedontheMonthlyAverage

SettlementPrice

Contract Contract months

LME Aluminium Monthly out to 63 months

LME Aluminium Alloy Monthly out to 27 months

LME Copper Monthly out to 63 months

LME Lead Monthly out to 15 months

LME Nickel Monthly out to 27 months

LME NASAAC Monthly out to 27 months

LME Tin Monthly out to 15 months

LME Zinc Monthly out to 27 months

10

Traded options

Option typeAmerican option

Last trading dayThe business day preceding the last declaration day for that option.

This is the Tuesday before the first Wednesday of the expiring option

month by 18.00 (UK time)

Last matching and registrationThe Tuesday before the first Wednesday of the option month

by 18.15 (UK time)

Last declaration day/timeThe first Wednesday of the expiring option month which is a business

day or, if not a business day, the next day which is a business day

Premium tick size*$0.01

Minimum strike price movement*$25 for strikes from $25 to $9,975

$50 for strikes from $10,000 to $19,950

$100 for all strikes over $20,000

Automatic exercise of options (for Clearing Members and their segregated accounts)LCH.Clearnetautomaticallyexerciseallin-the-moneyoptionsexceptfortwo

strikes above and below the at-the-money strikes. The at-the-money strike

is based on the closing price of the third Wednesday underlying futures

established on the last trading day of the expiry month. Exercise will result

in acquiring a third Wednesday future contract in the option month

AnExchangecalloptionwillbeautomaticallyexercisedbyLCH.Clearnet

if it is in-the-money with a strike price that is two gradations below the

at-the-money strike price

AnExchangeputoptionwillbeautomaticallyexercisedbyLCH.Clearnet

if it is in-the-money with a strike price that is two gradations above the

at-the-money strike price. All other strikes will be subject to manual

declaration by the buyer

On the last declaration day, any auto-exercised options can be undone

manually and the manual exercise of any strikes can be completed up

from 07.30 until 11.15

*Minimum strike movement and tick size for premiums available

in all clearable currencies

Contract Contract months

LME Aluminium Monthly out to 63 months

LME Aluminium Alloy Monthly out to 27 months

LME Copper Monthly out to 63 months

LME Lead Monthly out to 15 months

LME Nickel Monthly out to 27 months

LME NASAAC Monthly out to 27 months

LME Tin Monthly out to 15 months

LME Zinc Monthly out to 27 months

11

LMEminisFutures

Contracts• LMEAluminium

• LMECopper

• LMEZinc

Lot size5 tonnes

Prompt dateThird Wednesday of each maturity month, subject to trading regulations

Maturity monthsMonthly for 12 months, unless the contract is made after the last trading time

(see settlement basis below) for the calendar month on which the contract

is made, in which case, 11 months

Trading platforms• LMEselect(electronic)

• 24-hourinter-officetelephonemarket

CurrencyUS dollars

Settlement basisCashsettledbasistheLMEOfficialSettlementPricefortheprompt

date of the relevant underlying metal

Cash settlementOn the prompt date

Minimum price movement$0.25; $0.01 for a carry

12

The London MeTaL exchange LiMiTed | 56 Leadenhall Street, London EC3A 2DX

Tel +44 (0)20 7264 5555 | Fax +44 (0)20 7680 0505 | Email [email protected] V4.0/0311

Nothing in this document constitutes an

offer or a solicitation of an offer to buy or sell

any security or other financial instrument

or constitutes any investment advice or

recommendation of any security or other

financial instrument. To the best of the LME’s

knowledge and belief, statements made are

correct at the time of going to press.

All such statements and all opinions

expressed herein are published for the general

information of readers but are not to be taken

as recommendations of any course of

action. The LME accepts no liability for the

accuracy of any statement or representation.

LME contracts may only be offered or sold

to United States foreign futures and options

customers by firms registered with the

Commodity Futures Trading Commission

(CFTC), or firms who are permitted to solicit

and accept money from US futures and

options customers for trading on the

LME pursuant to CFTC rule 30.10.

© The London Metal Exchange Limited,

2011. No portion of this publication

may be reproduced without written

consent. The London Metal Exchange

logo is a registered trademark of

The London Metal Exchange Limited.

Contract Specifications - FT MErcati

Documents

Transcript of Contract Specifications - FT MErcati