LME category designed to boost scrap trading

The London Metal Exchange (LME) is proposing to adapt its rules to support a new category of membership known as registered intermediary brokers (RIBs). The LME says such a category can formalize the basis on which intermediating brokers operate in the inter-office market. RIBs arrange trades between market counterparties and can be crucial to liquidity development in growth products, according to the exchange.

“The introduction of RIBs into the LME membership structure is a really important development for the LME and may be particularly helpful in building liquidity for growth products such as our ferrous contracts,” says Robin Martin, head of market development at the exchange.

“The proposed changes will enable RIBs to register trades directly into the matching system on behalf of clearing members via a dedicated portal, reducing administrative burden while bringing more business to clearing members,” adds Martin.

The LME is proposing to introduce a two-tiered membership structure for RIBs: Tier 1 will be able to broker all existing LME products and be required to hold the same amount of B shares and pay the same annual fees as existing Category 4 Members; Tier 2 RIBs will be able to broker only a selection of growth products but will have no B-share requirements and a lower annual fee.