principal-to-principal market for base metals trading established in 1877. LME prices are used as reference prices in many world markets by metals producers and fabricators of metal products, and are the basis for most major commodity indices. LME contracts assume an eventual delivery of physical metal on the prompt date, but this generally does not occur, since the majority of LME business is for trade hedging LME trades cash and three-month contracts on aluminum, copper, nickel, lead, tin, zinc, aluminum alloy, and North American special aluminum alloy. Traded average price option (TAPOs) contracts are available for these metals. The London Metal Exchange Index (LMEX) is a base metals index comprised of the six nonferrous metals traded on the exchange designed for investors. In 2005, the LME launched the world's first futures contracts for plastics-polypropylene and linear low-density polyethylene, tradable across all platforms. The LME supports three trading platforms; open outcry on the "ring" (11:45 A.M.-5 P.M.), LME Select, the Exchange's electronic trading system (7 A.M.-7 P.M.), and 24 hours via telephone. In open outcry trading, contracts are traded in "rings"-a period of five minutes for each contract beginning at 11.45 A.M. After a break, the process is repeated. The second part of this session results in settlement and official prices, at or near 1:15 P.M. After official prices are announced, a period of trading called "the kerb" begins, with all contracts trading simultaneously. The second ring, or the afternoon session, begins at 3:20 P.M., following the structure of the first ring and ending with a 25-minute kerb period from 4:35 P.M. to 5 P.M. LME Select is the exchange's electronic trading platform, connecting 33 LME member firms.
Accredited traders can execute trades on the screen in addition to open outcry ring trading and the telephone market. All trades are covered by a matching system run by the LCH. Clearnet, which acts as a central counterpart to trades executed between clearing members of the exchange. www.lme.com.
