London (AFP) Sept 29, 2014 –
The London Metal Exchange, the main global metals market, said Monday it will raise fees by about a third in the first hike since its takeover by the Hong Kong Stock Exchange.
The LME said in a statement that transaction fees will increase by an average of 34 percent from January 1, 2015, in order to help fund investment in the exchange.
The rise is the first in seven years, LME chief executive Garry Jones told reporters. The new tarrif will be charged in US dollars, the same currency that contracts are traded.
The increase is "integral to our evolution into a truly commercial global exchange and underpins our continued investment and our next phase of expansion following the successful launch of LME Clear last week," said Jones, who is also HKEx co-head of global markets.
"The new LME tariff is competitive and ensures we can continue focusing on innovation and offering users the highest levels of service."
The group added that the changing regulatory environment and system upgrades have called for "substantial investment", which will continue as the LME grows its user-base and launches new products.
The LME, founded in 1877, is the world's largest exchange trading nonferrous metals, including copper and aluminium.
Hong Kong Exchanges and Clearing (HKEx) snapped it up in 2012 for 1.39 billion pounds ($2.26 billion, 1.78 billion euros). The institution had previously been owned by its members.
"Once the LME was taken over by Hong Kong Exchanges, it was inevitable that its fee structure would change," Nic Brown, head of commodities research at Natixis, told AFP.
"From being a low-cost exchange run by its members (whose profits were generated through trading), it is now operated by a company that must recoup its costs via fees.
"These costs include investment in clearing and trading systems as well as the large purchase price for the LME."
