Any warehouse approved by the LME, for the delivery, storage and collection of LME-branded metals traded on the Exchange.

The quoted market selling price. See also ‘offer’ with which this term is interchangeable.

A common non-precious metal, including non-ferrous metals.

The quoted market buying price.

One form of carry. In this case the simultaneous buying of metal for a near-dated prompt and the selling of that metal for a later-dated prompt. In effect, the party is borrowing the metal for the period.

In the context of the LME, a person or company that buys from or sells to customers. On the LME a broker acts as a principal to the contracts with customers carrying imbalances of trades in a house book, which they may offset with other brokers.

A market in which prices are rising.

Cost and freight, whereby the quoted price for physical material includes all costs incurred in shipping the metal to the customer’s location but not including insurance.

The simultaneous purchase and sale of the same tonnage of the same metal for delivery on different dates. Often known as a ‘calendar spread’ in other commodity markets. See ‘borrowing’ and ‘lending’.

To make matters worse, traditional lenders such as banks and credit unions have drastically tightened their credit standards for people wanting to borrow money.

Cost, insurance and freight, whereby the quoted price for physical material includes all costs incurred in shipping the metal to the customer’s location including insurance.

Central counterparty (CCP), defined under the European Market Infrastructure Regulation (EMIR) as being an entity that interposes itself between the counterparties to the contracts traded on one or more financial markets, becoming the buyer to every seller and the seller to every buyer.

The detailed requirements (as per the LME Rules and Regulations) of futures and options contracts. Will typically include; lot and tick size, available prompt dates, trading and clearing currencies and, in the case of physically settled contracts, underlying metal quality, shape and deliverable brands.

The date on which the board of directors of a company announces the next dividend payment. This statement includes the dividend's size, ex-dividend date, and payment date. Declaration date is also referred to as the "announcement date."

An approved location at which metal may be stored in order to fulfil delivery of LME contracts.

Any trading instrument which derives its value from an underlying asset – in the case of the LME, metal.

The price of one currency in relation to another.

A recognised low point in market prices. This may be a point beyond which the market does not expect the price to fall, the lowest price achieved before the market rises, or a level set by a customer as a minimum selling price. Opposite to ‘ceiling’. May also refer to the trading floor, or ‘Ring’ of the LME.

The curve made up of the different prices of contracts for different forward delivery dates.

An agreement to buy or sell a fixed amount of metal for delivery on a fixed future date at a price agreed today.

Futures or options transactions entered into with the motivation of reducing risk.

A term used to describe an option contract where the underlying price is above the strike price in the case of a call, or below the strike price in the case of a put. intrinsic value An element of an options premium. It is the amount by which an option is in-the-money.

One form of carry. In this case the simultaneous selling of metal for a near-dated prompt and the buying of that metal for a later-dated prompt. In effect the party is lending the metal for the period.

The maximum price increase/decrease from the previous closing price. There are no set limits on LME contracts, but under LME rules, limits can be imposed under certain circumstances.

The LME’s electronic trading platform.

A specified quantity of a single contractual unit (e.g., LME Copper 1 lot = 25 per tonne).

A request by LME Clear to provide additional collateral to cover an increase in the amount of variation or initial margin on open positions.

The daily process of calculating the current value of an open contract.

The date when a futures contract that has not been offset by an opposite position must be settled by delivery of physical metal.

Metals with no iron content.

The offer price quoted in the second Ring of the morning session, commonly used by industry as a reference price for physical metal on the day.

A trade designed to nullify price risk arisen from a physical position.

A contract that gives the buyer of the contract the right but not the obligation to buy or sell a futures contract at a set price. The buyer pays a premium for this right.

A term used to describe an option contract where the underlying price is below the strike price in the case of a call, or above the strike price in the case of a put. Exercising an out-of-the- money option would create a loss.

The net tonnage a party has bought or sold on any given prompt date. Also the overall position, being the net tonnage bought or sold for all prompt dates combined.

A one-off payment, made at the outset, to purchase an option. Can also refer to an additional amount of money paid to buy metal in a specific location.

The delivery date of a futures contract.

The circle of seats on the LME floor which members occupy when trading via open outrcy. More commonly the term is used to describe the periods of trading which are broken down into five-minute sessions for each metal.

An open position for the sale of metal.

A term referring to the difference in two prices. The contango or backwardation between two prompt dates or the difference between the bid and offer price.

The value of the underlying futures contract determined at the time of purchasing an option.

The amount of collateral required by LME Clear in order to protect itself against losses that have accumulated on any open positions of a member. LME Clear uses a variety of variation margin methods including discounted contingent variation margin (DCVM) for the LME’s physically settled, non- ferrous futures and realised variation margin (RVM) for precious and cash- settled contracts.”

A document of possession, issued by the warehouse company, for each lot of LME-approved metal held within an LME-approved facility. Warrants are used as the means of delivering metal under LME contracts.

The purchase/sale of a contract on a market and the simultaneous taking of an equal and opposite position, usually on another market, to profit from discrepancies in the price and/or currencies involved.

Market situation when the price for nearby maturity is higher than the price for longer dated maturities.

A market in which prices are declining.

An option pricing model devised by US mathematicians Fischer Black and Myron Scholes in 1973. Inputs of this include; volatility, underlying price, strike price, interest rates and time to expiry. Most LME traders use a version of the Black ’76 model, adapted for LME contracts.

All metal delivered into LME-approved storage facilities must be an LME-approved brand which conforms to specifications on quality, shape and weight.

One who anticipates a rise in prices.

Any day except; a Saturday, Sunday or any public (or bank) holiday in England.

A contract that gives the holder the right, but not the obligation, to buy metal futures at a set price (the strike price) on a given date (the exipry date).

The current price in the market for cash/spot contracts. LME cash contracts are for delivery two days forward from the trading day.

The negative pole in electrolysis. Cathodes deliverable on the LME are flat rectangular shapes that have been refined by electrolysis.

The process carried out by a CCP of, amongst other things, establishing positions, settling the obligations arising from those positions and ensuring that collateral is available to secure the settlement of such obligations.

Market situation when the price for nearby maturity is lower than the price for longer dated maturities.

A day order must be executed within the same trading day as the order is placed or it shall be cancelled.

Grades of metal, which have been officially approved by the LME as deliverable in settlement of LME contracts.

The rate of change of the premium price of an option with respect to underlying price changes.

The prices determined for margining purposes as at the close of business on each business day by the LME Quotations Committee and confirmed by LME Clear. These are sometimes referred to as ‘LME Closing Prices’.

The date after which an option can no longer be exercised.

Free on board/free on truck – whereby the quoted price for physical material includes all costs incurred in getting the metal to and loaded onto the means of transport.

The designated month in which a futures contract expires.

Good till cancelled – an order to buy or sell at a specified price, which is valid at any time during market hours until executed or the order is cancelled.

The amount of collateral required to support the open positions held with the CCP.

A trading session when open outcry transactions occur freely outside of scheduled Ring times and when all or some of the LME metals can be traded simultaneously.

An order in which a customer stipulates the maximum/minimum price acceptable.

A CCP (also known as a clearing house) for the LME.

An open position for the purchase of metal.

The total collateral required by LME Clear to cover variation margin and initial margin on all open positions.

An order to buy or sell without regard to a specific price. The member company will execute a market order at the best price available after receiving the order.

The process by which trades are input by two members who have made a trade with each other in order to confirm the trade.

The nearest delivery date or month to ‘cash’.

The quoted selling price for metal.

Closing of an open position. A sale offsets a long position. A purchase offsets a short position.

An order which has been placed into the market

Over-the-counter – a derivative transaction that is not standardised nor transacted on an exchange.

Trades that would result in the delivery of the metal if an offsetting position is not taken.

The morning trading between members which is carried out inter-office prior to the first LME Ring session.

Due for immediate delivery.

A contract that gives the holder the right, but not the obligation, to sell metal futures at a set price (the strike price) on a given date (the expiry date).

LME Category 1 Member firms that have the exclusive right to deal in the Ring.

A contract for delivery in two business days time. On the LME, the term ‘cash’ is more commonly used.

An order to close a position should the market rise above or below a stated level in order to minimise loss.

The prompt date of a futures contract.

A measure of how much a price fluctuates over time. Academically defined as the annualised standard-deviation of log-normal daily returns, normally expressed as a percentage.

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