The London Metal Exchange and its clearing arm, LME Clear, will keep trading and clearing fees unchanged for 2017, retaining fee reductions for short-dated carries and position transfer caps as announced in August, the exchange said Thursday.
LME Clear will implement a fee reduction for its warrants as collateral and compression services, while the LME will also introduce a waiver for the base metals usage licence fee for physical market participants.
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 will also drop to 25bps/year from 50bps year in 2017, with an additional annual cap of $3,000/member for any related LMEsword fees. LMEsword is the exchange's electronic transfer system for LME warrants.
"The reduction in fees for using warrants as collateral will allow us to make much greater use of this unique service, which brings flexibility and cost efficiencies to collateral management," said Bradley Campbell, global head of base metals trading at Standard Chartered, in an LME statement.
The LME's base metals market data usage licence, which came into effect in April, 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," the LME said.
But, it added, "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."
As a result, such physical users will not be asked to pay for the use of LME base metals prices in their physical contracts.
All new charges will take effect from January 1, 2017.
