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What Is the London Metal Exchange?

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  • Written By: A. Leverkuhn
  • Edited By: Andrew Jones
  • Last Modified Date: 11 September 2014
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The London Metal Exchange is among the biggest and most established markets around the world that deals chiefly in non-ferrous metals from its UK location. The London Metal Exchange offers futures contracts and options on different metals and commodities. It is part of a vibrant modern-day global trading community, where the Internet and various technologies have allowed for different and more sophisticated kinds of investments.

Since its establishment in the late 1800s, The London Metal Exchange has become an authority on the values of some metals and commodities. Billions in trades are executed here each day. Officials refer to an “international membership” for this exchange, where a great deal of its business represents parties overseas.

Although the London Metal Exchange still has an active trading floor, a telephone exchange is also part of the regular system for making trades of this market. In addition, an electronic platform has been added as computing has become a major part of all modern exchanges. Modern communications help investors get access to the opportunities, such as options contracts, that require elaborate agreements between buyers and sellers.

In terms of its actual ownership, the London Metal Exchange has become a part of a company called LME Holding Limited. Within the corporate structure, various boards and committees represent different parts of the company’s operations. A set of “members” represents those on the outside of the exchange who want access to the trades happening within.

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As a part of the European region’s financial landscape, the London Metal Exchange has its own place in the parts of the global monetary system that are housed in the U.K. Across the channel in Europe, various national financial exchanges with long histories have become part of a greater “Euronext” network of exchanges. These financial institutions have become more modern in recent decades to handle the challenges of phenomena like forex trading, where transactions frequently originate in one country and happen in another.

Those involved in the metals industry will often keep an eye on the LME. The liquidity of this central marketplace has a lot of influence on the value of the physical metals. That’s why people all over the world pay attention what’s going on in this exchange, as well as following the rest of London’s financial infrastructure.

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