May 17, 2018 / 4:09 AM / 2 months ago

LME says confident members will pay fees on over-the-counter trades

HONG KONG, May 17 (Reuters) - The London Metal Exchange on Thursday said its members’ compliance teams would ensure fees were paid on trades not carried out on the bourse but which reference LME prices.

The LME plans from June 1 to put a $1 charge on all over-the-counter transactions, which are trades carried out by two counterparties that are not routed through the exchange.

But some brokers have questioned how the bourse will enforce a fee on such trades.

“We are lucky that our members are very regulated, highly-compliant businesses,” the exchange’s chief executive, Matt Chamberlain, said at the LME Week Asia event in Hong Kong.

“I think we are now at a stage where compliance is so embedded in all of our organisations, that we know that it wouldn’t be in anyone’s interest to misreport because the consequences for doing so would be too great.” The LME hiked fees on trading contracts at the start of 2015 as owner, Hong Kong Exchanges and Clearing, sought to squeeze value from its $2.2 billion buy, which resulted in trade disappearing from the exchange into the OTC markets.

From the last quarter of 2017, it cut fees for some short- and medium-dated trades. It has seen some volumes revive since then. (Reporting by Melanie Burton and Tom Daly in Hong Kong Editing by Joseph Radford)

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