LME Account Type

The London Metal Exchange (LME) offers several types of accounts for traders, categorized primarily into base metal and precious metal memberships. The base metal membership includes seven categories, each with varying trading and clearing rights:

• Category 1:
• Trading rights: Open outcry in ring, telephone market, LMeselect.
• Clearing rights: Can issue client contracts and clear trades for themselves and clients.
• Requirement: Must be members of the LME Clearing House.
• Category 2:
• Trading rights: Telephone market, LMeselect.
• Clearing rights: Can issue client contracts and clear trades for themselves and clients.
• Requirement: Must be members of the LME Clearing House.
• Category 3:
• Trading rights: Telephone market, LMeselect.
• Clearing rights: Cannot issue client contracts; can clear trades for themselves only.
• Requirement: Must be members of the LME Clearing House.
• Category 4:
• Trading rights: Can trade client contracts in telephone market and LMeselect.
• Clearing rights: Can issue client contracts but not clearing members; must appoint a designated clearing member.
• Category 5:
• Trading rights: May be customers of Category 1, 2, or 4 members.
• Clearing rights: Not clearing members and do not need to be regulated.
• Category 6:
• Trading rights: Individuals in the industry wanting an association with LME.
• Category 7:
• Trading rights: Honorary memberships granted at the discretion of the directors.

For precious metals, the membership categories include:

• General Clearing Member (GCM): Can trade and clear contracts on behalf of themselves and clients.
• Individual Clearing Member (ICM): Can trade and clear contracts for themselves.
• Non-Clearing Member: Can trade contracts on behalf of themselves and clients but must clear trades via an administrative clearer.

LME Broker Account Opening Process

To open an account with the LME, traders must follow a structured process:

• Register as an LME Member:
• Complete an application form and provide necessary documentation, including financial statements and proof of compliance with regulatory requirements.
• Set Up a Trading Account:
• Once registered, traders need to establish a trading account with an LME broker, who will act as an intermediary for executing trades.
• Access Market Data:
• Traders can obtain real-time market data through various channels, including the LME website and approved data vendors.
• Submit Warrants:
• Physical warrants for the metal must be submitted to an LME-approved warehouse, serving as proof of ownership for facilitating physical delivery.
• Manage Risk:
• Utilize LME futures and options contracts to hedge against price fluctuations, ensuring protection of profit margins.

By following these steps, traders can successfully connect with the LME and begin trading in a regulated environment.