LME Set To Launch Mini Metals Contracts Targeting Asian Traders

The London Metal Exchange (LME) is reportedly eyeing Asian retail investors as interest in the region skyrockets, according to the company’s CEO Matthew Chamberlain.

An earlier report by Reuters noted that the market should brace itself for the launch of dollar-denominated metal mini contracts on the Hong Kong Futures Exchange (HKEX) within months.

The HKEX acquired the LME in 2012 and looks to offer the futures contracts products targeting six base metals.

According to Chamberlain, the company’s futures contracts will be standardized monthly offerings that reference prices on the LME.

Speaking on CNBC’s “Squawk Box,” the LME chief executive explained that the platform was seeing increased activity during Asian hours on its main contracts. However, it was a big challenge for any Asian investor to just get their business to London, and have their business running during the Asian trading hours.

He added that the move to have its services on the HKEX is to make it easy a majority of Asian investors to access metal contracts and benefit from the available liquidity.

With the launch, Asian investors will access six of LME’s major contracts that have underlying metals like copper, zinc, lead, aluminum, nickel, and tin.

Notably, the yet-to-be-launched mini contracts are much smaller compared to those metal contracts offered by the LME at its London exchange. Investors will access five-metric ton lots for copper, zinc, and lead; and one-metric ton lots for tin and nickel.

The London Metal Exchange is one of the global leaders in the metal markets space and has the capacity to facilitate risk management related to metals. The company provides for this via its exchange-traded futures contracts.

The metal contracts launch come almost half a decade after a similar ventured failed on the Singapore Exchange. It also follows a miserable year for mini metal contracts as its London volumes for 2018 was barely visible.

Aware of the failure on the SGX in 2014, Chamberlain noted that the company was positive this time around as the Asian investor community already contributes sufficient liquidity on the LME.