what is the london metal exchange lme 
the london metal exchange lme is a commodities exchange that deals in metals futures and options it is the largest exchange for options and futures contracts for base metals which include aluminum zinc lead copper and nickel the exchange also facilitates trading of precious metals like gold and silver the lme is located in london england but has been owned by hong kong exchanges and clearing since 2012 1 the prices discovered on the lme are considered the standard global prices for base metals understanding the london metal exchange lme the lme is one of the main commodities markets in the world and allows for the trading of metals options and futures contracts it also lists futures contracts on its london metal exchange index lmex which is an index that tracks the prices of the metals that trade on the exchange options and futures contracts on the lme are standardized with respect to expiration dates and size expiration dates are structured so that traders can choose from daily weekly and monthly contracts meanwhile contracts are traded in sizes called lots which vary from 1 to 65 metric tons in weight lot size will vary depending on the metal market participants on the lme are typically looking to hedge risk or seeking to take on risk a hedger might be a producer or consumer and seek a position in a future or options contract to protect from future price moves in the metals market on the other hand traders and speculators buy or sell metals futures or options to profit from short term price moves history of the lmethe london metal exchange can be traced back as far as the opening of the royal exchange in london in 1571 where traders in metal and a range of other commodities began to meet as britain became a major exporter of metals european merchants began to arrive to join in these activities according to the lme s website the origin of the ring tradition began in the early 18th century in the jerusalem coffee house here a merchant with metal to sell would draw a circle in the sawdust on the floor and call out change all those wishing to trade would assemble around the circle and make their bids and offers 1in 2012 the lme was acquired by the hong kong exchanges and clearing 1 consolidation has become a common trend among the world s exchanges as they battle to reduce costs and boost their survival prospects in a highly competitive sector for example the cme group acquired the new york mercantile exchange nymex in 2008 nymex in turn had merged with the comex commodities exchange in 1994 creating the largest physical commodity exchange at the time 2trading metals on the lmethe lme has three methods of trading metals open outcry through the lme select electronic trading platform or by telephone systems the nature of commodity exchanges is changing rapidly the trend is moving in the direction of electronic trading and away from traditional open outcry trading where traders meet face to face or in trading pits in 2016 cme group closed the nymex commodities trading floor nymex was the last of its kind but the bulk of its energy and metals volumes had shifted to computers 3 in a similar move a year earlier the cme shut down a commodity trading floor in chicago and ended a 167 year old tradition of face to face trading in favor of electronic trading 4it is unclear how long the lme will be able to maintain its physical open outcry trading model it is the only physical commodity exchange in europe remaining however the rapid advancement and acceptance of electronic trading are not working in favor of the open outcry model lme and ring trading ring trading is the method by which certain types of investment business are conducted on the lme trading activity occurs in five minute intervals known as rings within a six meter diameter circle a particular type of trading pit the pit contains two large display boards that show current prices each of the ring dealing members has a fixed seat within the ring behind which an assistant is permitted to stand to pass orders to the ring dealing member and to liaise with customers regarding market conditions ring sessions are divided by trading instruments for example steel trading takes place during the first session from 11 40 am to 11 45 am and in the second session 1 10 pm to 1 15 pm gmt trading occurs in five minute intervals in the following order steel aluminum alloy tin premium aluminum copper lead zinc nickel and cobalt ring trading at the lme occurs between 11 40 am and 5 00 pm however inter office telephone trading is available 24 hours a day check the lme s website for a detailed schedule example of lmean investor looking to trade on the lme has three options via the lme s electronic portal lmeselect the ring or on the 24 hour telephone market investors must conduct their trading through an lme member information on how to become a member as well as a list of lme certified members is available on the exchange s website once you have selected a method and member through which you will conduct your trading the next step is deciding which type of contract and for what metal you re looking to purchase the lme offers seven contracts for its fourteen underlying metals futures options tapos monthly average futures lmeminis trade at settlement and hkex london minis 56once you have decided what and how you want to trade simply log into your brokerage account and you re ready to go 