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Saturday, May 31, 2014
LME Will Delay Start to Position Reports Until August
The London Metal Exchange, the world’s largest metals bourse, delayed starting commitment of traders reports until August to allow more time for members to classify positions.
The reports will be published weekly starting Aug. 5, it said in a notice to members today. The first report was initially scheduled for July 1 after ending a one-month market consultation on May 23. The extension will enable members enough time to submit information on positions.
“The LME acknowledges member feedback in respect of the timeline proposed by the LME for classification of predominant business activity,” the bourse said in the notice. The LME designed the reports to be consistent with other markets and will continue to keep its format under “active review.”
The 137-year-old bourse is joining NYSE Liffe and ICE Futures Europe in reporting trader positions similar to those issued by the U.S. Commodity Futures Trading Commission. Consumers and producers of metals asked the bourse to increase information about the market. The exchange started this month publishing reports disclosing metal wait times and inventories held by individual warehouse companies.
Category one to four members are required to classify their positions and those of their clients into types of activity. The reports will break down market open interest by category of participant, similar to the CFTC, including producer, merchant, processor or user; broker dealer or index trader; money manager; other reportables and those not defined.
“While a COT report will be helpful in terms of increasing apparent transparency (albeit backwards looking owing to the weekly nature of the report), the misclassification of a few major market players will have a significant impact in terms of how the report can be interpreted,” Leon Westgate, an analyst at Standard Bank Plc in London, said in a report today.
The CFTC releases weekly reports on positions by type and NYSE Liffe, the derivatives arm of NYSE Euronext, began giving similar information for agricultural products in 2011. ICE Futures Europe started publishing Commitments of Traders Reports in Europe for Brent and gasoil in 2011.