London 23/08/2016 - The LME will implement its cap on fees for position transfers from September 1, it said.
The exchange announced at the start of the month it will limit the charges for members and client position transfers, allowing users to migrate large open positions to manage portfolios. This will be capped at $10,000 per transfer from an average 2015 cost of $30,000.
When Hong Kong Exchange & Clearing (HKEX) purchased the LME, it agreed to keep fees unchanged until 2015. In September 2014, it announced it would introduce an all-in tariff that would lift the average fee paid by 34 percent, with ranges from minus 25 percent on give-ups to plus 97 percent on some types of trades.
Market participants quickly pointed out that higher fees could hit LME business and prompt a shift away from the exchange. Indeed, LME volumes fell almost eight percent in the first half of this year while 'Tom'/next carry trade business is at its lowest since before the 2008 financial crisis.
The LME branded talk that fees were too high as a "myth", attributing the lower volumes to reduced physical market activity and poor global economic conditions. But it is lowering its changes following subsequent talks with the market.
(Additional reporting by Kathleen Retourne, editing by Mark Shaw)