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London Metal Exchange trims fee increase after complaints

Release time:2014-12-08

Dec 08, 2014 01:46 GMT   Source: Reuters

Tags: LME FEES

 

 

Fri, 5 Dec 11:44:00 GMT
 
* Trims average fee increase to 31 pct from 34 pct
* To extend discount on ring trades to other deals
 
(Adds comments from LME spokeswoman, details, background)
 
By Eric Onstad
 
LONDON, Dec 5 (Reuters) - The London Metal Exchange (LME) on Friday trimmed a proposed average increase in transaction fees to 31 percent from 34 percent after complaints by members.
 
The LME said that it made the changes following feedback from members and because of its commitment to open-outcry trading and to support the price discovery process.
 
The 137-year-old LME had announced the fee increase in September as its owner moved to boost profit from the world's biggest industrial metals market after a costly takeover. [ID:nL6N0RU1H7]
 
The LME's owner, Hong Kong Exchanges and Clearing Ltd (HKEx) <0388.HK>, had splashed out $2.2 billion to buy the exchange, a price that analysts said was very expensive.
 
But some LME members objected to the fee increase, saying it would be likely to force brokers and banks to ditch some commission-free terms and review their business models. [ID:nL2N0SA2DC]
 
The tariff structure included a significant discount on
 
"ring" trading after the LME said in June it would keep open-outcry trading, bucking a trend by most other markets to shift to all-electronic operations.
 
Friday's revision will extend that ring discount to other trades, such as telephone transactions, that are based on trades in the ring, LME spokeswoman Miriam Heywood said.
 
The revised average increase of transaction costs at 31 percent includes clearing fees. Looking at only trading fees, the increase will come down to 60 percent from 65 percent, Heywood said.
 
The new fees will still take effect from Jan. 1 and there would be no further revisions before then, it said.
 
Before the LME's sale in December 2012, it was owned by the banks and brokers that used it and therefore trading fees were kept very low for members.
 
HKEx promised when it was bidding for the LME that it would freeze the low fees during an initial period, but the moratorium expires in January.
 
 
(Reporting by Eric Onstad. Editing by Jane Merriman)
 
((eric.onstad@thomsonreuters.com; +44 20 7542 7093; Reuters Messaging: eric.onstad.thomsonreuters.com@reuters.net))
 
Keywords: LME FEES/