Factbox: LME's measures to revive its nickel contract

FILE PHOTO: Traders work on the floor of the London Metal Exchange
Traders work on the floor of the London Metal Exchange in London, Britain, September 27, 2018. REUTERS/Simon Dawson

LONDON, March 30 (Reuters) - The London Metal Exchange (LME) on Thursday launched sweeping measures to revive its flagging nickel contract, including plans to cut waiting times and scrap fees for new brands of the metal that can be delivered against its contract.

Below is the list of the initiative:

- The LME plans to cut the waiting period to approve new nickel brands to three months of regular sample assaying while also waiving fees. Currently it can take nine months or longer, an industry source said.

- The exchange plans to make permanent the daily price limits imposed on all metals after last year's nickel swings, though it will tighten the caps on the main metals - copper and aluminium - to 12% from 15%.

- The LME will consider broadening its nickel contract to include coarse nickel powder, which can be converted and used in production of batteries, to increase the amount of nickel eligible for delivery. The contract currently accepts full plate and cut cathodes, pellets, briquettes and rounds. A decision on this issue is expected in April.

- The LME will work with the Qianhai Mercantile Exchange (QME) to develop a China-based spot market for nickel sulphate and nickel matte to support trade flows in Asia.

- The LME plans to consider whether temporary measures, designed to address the current low levels of stocks - a backwardation limit and deferred delivery mechanism - should be made a permanent element of its rulebook.

- The LME also proposed to introduce monthly reporting of "eligible" stock - non-LME warranted metal sitting in LME-licensed warehouses - while considering daily reporting in the future.

This data would be provided in parallel with the current off-warrant stock report, which tracks metal where there is a contractual right to warrant or to be stored in an LME-licensed shed.

- The LME will also look for options to reduce the level of margin charged against the LME nickel contracts, consider steps for the encouragement of liquidity onto the electronic central pricing venue and consider changes to its closing prices methodology.

- The LME is on track to begin testing its new trading platform, LMEselect 10, among members in July and launch it in the second quarter of 2024.

Compiled by Polina Devitt; editing by Paul Simao

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