The London Metal Exchange (LME) has launched LMEswaps for all of its non-ferrous metals. The financially settled contracts based on the average monthly price are the first of their type to be traded on-exchange in the world. They are designed for participants of the physical industry who need to hedge the monthly average price.

“LMEswaps introduce a new kind of contract to the market, which responds to the needs of the physical industry”, says Chris Evans, Head of Business Development at the LME. “For the first time, LMEswap users will benefit from a regulated market with the same counterparty default risk protection offered by other LME contracts.”
 
Tradable on LMEselect and the 24-hour telephone market, LMEswaps enable physical market participants to enter into a fixed price and settle the difference against the floating price (the Monthly Average Settlement Price or MASP) at the end of the averaging period – all in one simple trade.