(Adds details, background)
By Eric Onstad
LONDON Dec 15 The London Metal Exchange (LME)
will not cut its main trading and clearing fees next year, it
said on Thursday, despite criticism that high charges were
driving business away from the exchange.
There have been pleas to reduce trading fees, including
during a recent keynote speech at industry gathering LME Week
last month by the founding partner of Red Kite Group, Michael
The exchange, the world's oldest and largest market for
industrial metals, however, made some concessions on Thursday in
Its clearing house, LME Clear, will cut fees by two-thirds
for its compression services and will halve charges for those
using warrants as collateral instead of cash or bonds, a
The LME, owned by Hong Kong Exchanges and Clearing Ltd.
, will also waive a usage licence fee for physical
market participants, it added.
The usage licence, which came into effect in April, was
targeted at those who use LME prices in contracts or structured
products, but do not contribute to the formation of prices.
"We believe that this waiver appropriately recognises the
strong bond between the Exchange and the industry which it
serves," said Chief Operating Officer Matthew Chamberlain.
It was unclear whether the concessions would be enough to
calm angry members who have protested against trading fee hikes
that came into effect in January and averaged 31 percent.
In August, the LME announced 44 percent cuts for short-dated
trades, but many members said that did not go far enough to
attract back business after volumes declined.
"If costs of trading on the exchange are prohibitive, it
will drive customers away and the golden goose will die of
malnutrition," Farmer said in his November speech.
"Many users will still find the cost of trading to be high
and I would strongly recommend the LME to consider further
reductions to attract liquidity back."
(Reporting by Eric Onstad; Editing by Susan Fenton and David