The lower revenues from reduced London Metal Exchange trading fees - seen when HKEX, the exchange's owner, published its first-quarter results last week - is unsurprising and should not be a cause for mutterings at the current LME Asia Week gathering in Hong Kong.
First-quarter revenue from HKEX' commodities business was down 7% from a year earlier - despite a 20% year-on-year jump in average daily volumes (ADVs), the reductions in fees for short- and medium-dated carry trades resulted in a fall in trading fees by 7%. Overall, LME ADV in the first quarter, when non-fee generating admin trades are stripped out, rose 3% to 628,313 lots. While this a modest uptick, it underlines the perception that the trend of falling turnovers has been reversed. Within that general picture, a look at the specific area of short- and medium-dated carries shows signs of recovery in volumes of these important and unique LME trades. In short-dated carries, the exchange lowered fees in October 2017; in the January-April 2018 period, ADVs in these rose 11%. In the medium-dated carry trades, where fees were cut in November 2017, there has been a 25% jump in ADV. The...