INTERVIEW: LME is building tech to list multiple contracts in parallel – ceo

“We looked at what many of our competitors do: they have no timidity in listing ten or 20 contracts and saying ‘Look, a couple of these will work and rest won’t so we won’t be embarrassed about the 18 that didn’t work but proud of the two that did’,” Chamberlain said.

“We invested a lot in the tech, so we are now in a better position to say actually we are launching ten or 20 or 30 contracts. I am not sure we need to prioritise.”

In 2018, the product release schedule involves expanding ferrous, cobalt, molybdenum, alumina, aluminium premiums and potentially lithium, he told Metal Bulletin.

The LME plans to introduce cash-settled versions of the cobalt and molybdenum contracts and would like to keep the physically-settled contracts as there is very low cost in keeping them physically-settled, Chamberlain said.

“Cobalt is a good example of where actually many of the producers prefer the physically-settled LME approach and many of the consumers prefer the index priced cash-settled approach. We could spend years arguing why our approach is superior or we could just list both and allow the market to decide,” he added.

“It’s clear that the Metal Bulletin price is very well respected and would be a very probable candidate for the index there,” he added.

The LME addressed this under the “users’ choice” model in its strategic document that was released earlier this month.

“We offer a particular way of doing it, which some people like and some people don’t. Let’s offer both and see where the market goes,” Chamberlain told Metal Bulletin. “That’s how I see it on cobalt.”

Metal Bulletin’s benchmark cobalt price is widely used in the market in physical contracts. Metal Bulletin’s free market low-grade cobalt price on an in-warehouse Rotterdam basis was assessed at $28.70-29.90 per lb on Wednesday September 20.