London 20/08/2015 - Market-makers on the London Metal Exchange'S (LME) existing copper, aluminium and zinc 'third Wednesday' contracts will be eligible to receive a full rebate of all trading and clearing fees charged by the exchange for business resulting from their market-making activities, the LME said in a release on Thursday.
This would be alongside a monthly stipend for each programme for which a market-maker acts to aid technology and personnel costs
The move comes as part of the LME’s liquidity roadmap programme. Trading and clearing fee rebates shall apply to all trades which form part of the market-maker’s market-making activities from October 1, 2015.
The incentives will be for the copper, aluminium and zinc contracts for the outright 'third Wednesday', 'third Wednesday'-to-'third Wednesday' and 'third Wednesday' to/from three months.
There are up to a maximum of five market-making slots available for each metal for each of the market-making programmes, and interested parties have up until 9am (BST) on September 8 to register.
The initial duration is expected to be for 12 months and will apply to trading on LME Select only.
The attempt to boost liquidity on this date has resulted in mixed opinions, with concerns that the LME could lose what makes it unique in pursuit of higher volumes.
In January, the exchange relaxed its order-to-trade ratio policy on 'third Wednesdays' to make it more attractive to would-be users who are deterred by the LME's unique system of prompt dates - the dates on which a forward contract will be settled, going daily out to three months, weekly out to six months and monthly beyond six months.
(Editing by Martin Hayes)