History of the LME

The London Metal Exchange (LME), the world’s largest non-ferrous metals market, is now nearly 135 years old. It is the premier exchange for the global metal industry; the vast majority of commercial transactions have an LME price reference discovered on Europe’s last open-outcry trading floor.

It is also one of the last global fully independent financial markets. But that might change soon – the exchange this autumn starts a process where one of several interested parties may become its new owner.

The following is a brief chronology of major events in the LME’s history:

September 2011 – LME reveals that it had received 10 or more expressions of interest with regard to potential bids. Any shareholder decision on an acquisition of the exchange is unlikely before April 2012.

September 2011 – Exchange to launch non-ferrous swaps contracts for phone and screen trading in January 2012.

September 2011 – Trevor Spanner appointed managing director of post-trade services. He will take charge of the clearing project.

September 2011 – Erus Metals approved as registered warehouser, listed for metals in Hull.

August 2011 – LME says will publicise live forward price curve during PM from February 2012 to enhance transparency.

July 2011 – LME review on warehousing concludes – load-out rates increased from April 2012.

May 2011 – LME says it is considering self-clearing, starts consultation process with decision expected by year-end.

May 2011 – Plastics futures contracts delisted, warehouse inventories fall to zero.

February 2011 – LME-SGX metal futures start trading with copper, aluminium and zinc. Lead and steel expected by end-2011, then tin and nickel will follow.

January 2011 – LME launches Asian reference prices.

November 2010 – LME and LCH.Clearnet will roll out OTC (over-the-counter) gold post-trade clearing service. The launch date is November 29. Contracts to be cleared will be captured via LME’s trade capture system, LMEsmart, with matched bilateral trades submitted to LCH.Clearnet for clearing.

October 2010 – LME says will de-list plastics futures contracts at end-April 2011.

August 2010 – Chicago and Detroit selected as further delivery points for the global steel billet contract.

July 2010 – The two regional steel contracts – Mediterranean and Far East billet – are merged into a single, global contract.

July 2010 – LME and Singapore Exchange (SGX) to develop cash-settled mini monthly metals futures contracts jointly; these will be traded and cleared through SGX.

July 2010 – LME officially opens its Asia office in Singapore.

June 2010 – New Orleans announced as first US location for delivery of steel billet.

April 2010 – Sir Brian Bender appointed new LME chairman.

February 2010 – Cobalt and molybdenum start trading.

February 2010 – LME submits a formal proposal to bring trading of Forward Freight Agreements (FFAs) on-exchange in a joint venture with The Baltic Exchange.

February 2010 – LME chairman Donald Brydon announces intention to stand down.

November 2009 – MMTA members vote to reject OPDS system.

September 2009 – Proposals to revamp corporate governance rejected at EGM.

September 2009 – LME and MMTA announce they are studying setting up an online price discovery system (OPDS) for some minor metals.

August 2009 – Cobalt and molybdenum contracts launch date confirmed as February 22, 2010.

July 2009 – LME proposes the formation of a new joint venture with shipbroker sector for freight forward contracts, tentatively called the London Baltic Freight Exchange.

July 2009 – LME says holding talks with participants in the OTC freight market with a view to introducing on-exchange forward freight contracts.

July 2009 – Smart (System for Matching and Registering Trades) introduced. This decouples matching from LCH.Clearnet, which has handled this function in tandem with clearing for 22 years.

July 2009 – Exchange adds Rotterdam as storage location for steel billet.

July 2009 – Consultation on plastics trading completed. Contracts will cease trading on the floor in February 2020, with settlement prices reached electronically.

April 2009 – LME pays first ever dividend to ordinary shareholders and drops rebate paid to members based on volumes.

January 2009 – LME sets up liaison group with Minor Metals Trade Association (MMTA).

September 2008 – Forward contract extensions go live.

September 2008 – Exchange says it will introduce contracts for cobalt and molybdenum in the second half of 2009, with trading on all three platforms out to 15 months. The date is subsequently put back as infrastructure systems are delayed.

July 2008 – Spot trading starts in steel billet, concluding contract launch process.

May 2008 – Further enhancements made to plastics contracts, including the removal of warrant shelf-life.

April 2008 – Steel billet futures ‘hard launch’ – open-outcry ring trading starts.

March 2008 – Cleared Average Price Swaps trading starts

February 2008 – Steel billet trading starts with ‘soft launch’

January 2008 – LME says it will extend prompt dates for primary aluminium, copper, zinc, nickel and lead futures contracts.

September 2007 – LME says ‘soft-launch’ of steel contracts on Select and inter-office phone market will be on February 25, 2008.

June 2007 – Plastics futures revamped, with regional contracts and prompt dates launched.

June 2007 – LME says it will start trading in two physical steel billet contracts on April 28, 2008.

December 2006 – LME introduces mini five-tonne contracts in copper, aluminium and zinc.

September 2005 – First plastics futures contracts become deliverable.

May 2005 – Exchange launches futures contracts for two plastics – linear low-density polyethylene and (LL) and polypropylene (PP).

April 2005 – LME starts publishing prices and volumes for matched trades in ring, kerb and inter-office trade.

July 2004 – Exchange sets May 27, 2005 as launch date for two plastics futures contracts – the first non-metallic instruments in its history.

March 2002 – Silver contract suspended. North American Aluminium alloy contract introduced.

February 2001 – Electronic trading platform LME Select introduced.

September 2000 – LME demutualised.

April 2000 – LMEX index contract launched.

May 1999 – Revamped silver contract launched.

June 1996 – Sumitomo Corp head trader Yasuo Hamanaka plunges market into crisis after losing $2.6 billion on copper over a 10-year period.

1994 – LME moves to Leadenhall Street.

1993 – Copper and lead trade redenominated in dollars from sterling.

October 1992 – Aluminium alloy contract introduced.

1991 – Maximum length of copper, nickel, aluminium and zinc contracts extended to 27 months from 15 months. US warehouses registered.

1989 – LME launches Vendor Feed System (VFS), its first electronic pricing system. Tin contract is brought back, denominated in dollars. Japan warehouses registered.

1988 – Traded options for metals introduced. Previously, non-transferable options had been transacted. In September nickel and zinc trading switches from sterling to dollars.

1987 – Singapore warehouses registered.

1985 – Tin crisis – prices tumble after the International Tin Council’s buffer stocks collapse. Contract suspended.

September 1980 – LME moves to Plantation House, Fenchurch Street.

April 1979 – Nickel contract introduced.

December 1978 – Standard aluminium contract introduced.

1960 – LME has registered warehouses in 10 UK cities.

October 1952 – The exchange reopens following the Second World War.

1941 – Tin trade halts when Japan enters the war.

1939 – Copper, lead and zinc trading on LME halts at outbreak of the Second World War when the UK government takes over the purchase and stocking of metals.

1920s – Pig iron contract suspended.

1915 – Zinc contract officially launched.

July 1914 – LME closes because of fear of supply shortages at the outbreak of the First World War. It reopens in autumn of the same year.

1903 – Lead contract introduced.

1882 – The exchange moves to purpose-built premises in Whittington Avenue.

1877 – The London Metal Market and Exchange Company established above a hat shop in Lombard Court. It trades in tin, copper and pig iron.