LME Market Structure Overhaul Aims to Boost Liquidity, Transparency, and Electronic Trading

LME

Phased Reforms Target Block Trades, Electronic Access, and OTC Incentives

The LME market structure overhaul is set to reshape metals trading dynamics over the next two years. The London Metal Exchange has published a detailed roadmap outlining structural reforms designed to enhance liquidity, increase price transparency, and encourage electronic trading through its LMEselect platform. Key components include new block trade thresholds, automated crossing, and adjusted incentives for exchange-based trading.

Phase One Targets Trading Efficiency and Fee Realignment

From 2025 through mid-2026, the LME will roll out metal-specific block thresholds, a new automated crossing mechanism, and fee reductions for certain daily spread trades. By revising the definition of short-dated carries and applying lower fees irrespective of execution method, the LME aims to shift activity from OTC to on-exchange venues. It will also launch a liquidity provider programme and introduce TAS trading and tick size optimisation.

Phase Two to Deliver Data Transparency and OTC Oversight

In late 2026, the second phase of the LME market structure overhaul will expand market data transparency. Planned initiatives include the publication of OTC and open interest data, and real-time visibility into inter-office risk transfers, subject to applicable waivers. These measures reflect the LME’s ongoing efforts to modernize its market infrastructure while preserving physical delivery integrity.

The Metalnomist Commentary

The LME market structure overhaul is a pivotal step toward aligning physical and electronic metals markets. As algorithmic trading and regulatory scrutiny intensify, the LME’s hybrid approach could redefine price discovery standards in global base metals.