Industry association VDM slams LME discussion paper proposals

Industry association Verband Deutscher Metallh??ndler (VDM) has slammed proposals by the London Metal Exchange to close its open-outcry trading floor, increases fees and change its margin methodology, saying that these moves would contradict the LME's core mission to serve the physical metals markets and could lead to the elimination of the exchange's dates structure.

The organization represents around 90% of the non-ferrous metal markets in Germany and Austria. In a response letter to the LME's recent discussion paper, it said that the proposals would adversely affect trading efficiency and liquidity, hinder the provision of credit lines and raise costs.
According to VDM, it foresees the topic of the next LME discussion paper being to "dispose of the current 'complicated' dates structure."
"The document and the discussion with the LME representatives have raised significant concerns that the LME is moving in a very different direction [to servicing the physical markets] and in a way which demonstrates that there is only a surprisingly limited understanding of the functioning of its own market," the letter said.

"We were getting the impression that the recent meeting [between LME chief executive officer Matthew Chamberlain and representatives of VDM] was not a discussion but a preparation of the market...

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