LMEselect User Limits
December 2016
Please respond to:
Trading Operations
Telephone: 0207 113 8200
Email: [email protected]
THE LONDON METAL EXCHANGE
10 Finsbury Square, London EC2A 1AJ | Tel +44 (0)20 7113 8888
Registered in England no 2128666. Registered office as above.
LME.COM
LMEselect User Limits
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Summary
Within the LMEselect system there are number of configurable limits that can be defined for both
price and volume. There are limits known as the ‘soft limits’, which are available to those who use the
LMEselect GUI client and are set by the individual user and there are also ‘hard limits’ which are set
by the Exchange which apply to all users.
The options available under the soft limits are a default quantity amount for each new order, a
maximum quantity amount for each new order and a maximum price deviation, which defines the
maximum US Dollar deviation value allowed from the last traded price. In all cases when a user
places an order that breaches any of these limits then he/she is presented with an on screen
message advising the details of the breach and asks if they wish to proceed. Therefore, all soft limits
can be breached if the user so wishes.
Hard limits are set by the Exchange for maximum order quantity, maximum price deviation and
maximum erroneous price deviation. As the name suggests none of these limits can be breached. If
a user enters an order that attempts to breach any of these limits they will again be presented with an
on screen message advising the details of the limit breach and the maximum value allowed.
The LME regularly review the hard limits and adjust as required. The hard limits may also be
adjusted intra-day.
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LMEselect User Limits
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Hard and Soft Limits
2.1 Soft Limits
The user may define the limits for ‘Max Price Deviation’, ‘Max Quantity’, and ‘Default Quantity’. Under
the heading of LME set hard limits, these are set by the exchange and cannot be changed by the
user.
The Max Price Deviation, amount defines the maximum price allowed above or below the last traded
price, or the previous nights close in the event of no trades. If the order price exceeds the defined
amount the user will see a pop-up message asking for validation to proceed with the order
placement. Max Quantity defines the maximum volume allowed for a single order. This limit applies
to both outrights and carry trades. Again this limit can be breach and the order placed after the user
has clicked on ‘yes’ to the pop-up message.
The Default Quantity sets the default amount when entering and a new order. This volume amount
can be amended during the order entry process.
The table below is an example of the view as seen been by Member GUI users.
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2.2 Hard Limits
The hard limits are set by the exchange and are regularly reviewed by the LMEselect team. These
limits cannot be exceeded by a user and upon attempting to enter an order that breaches these limits
the user will receive a pop-up message notifying them of the maximum price or maximum volume the
system will accept.
The Max Price Deviation limit defines the maximum price at which a user may enter a Bid price below
the last traded price, or an Offer price above the last traded price.
The Max Erroneous Price Deviation limit sets the maximum price allowed for a Bid price above the
last traded price, or an Offer price below the last traded price. (In the event of no previous trades then
the previous evening’s closing price is referenced). This is feature allows users to sweep the market
when looking to execute volume quickly. The Max Quantity is the limit set for the volume on an order.
This limit applies to both outrights and carry trades.
The table below is an example of the view as seen by an LMEselect Admin user.
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Current Production User Limits
Below are the ‘hard limits’ currently active in the live production environment.
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Revision History
4.1 Revision – December 2016
Amended screen shots reflecting the updated ‘User Limits’ in LMEselect Version: 7.4.1.
4.2 Revision – January 2016
Amended screen shots reflecting the updated ‘User Limits’ in LMEselect Version: 7.4.1.
4.3 Revision – October 2015
After further price falls in Copper, Nickel and Tin, the maximum erroneous price deviation limits were
reduced to bring the values into line with the 2% no-cancellation range on outright contracts (stated in
the LMEselect Error Trade Policy).
4.4 Revision – March 2015
After price falls in Copper, Nickel and Tin the maximum erroneous price deviation limits have been
reduced to $115, $280 and $350 respectively. Owing to lower liquidity, Aluminium Alloy and NASAAC
have been increased to $75; a measure introduced to reduce the risk of users being unable to enter
valid orders when the market price has moved significantly.
4.5 Revision – May 2013
After the significant price drops in the Nickel and Copper contracts the maximum erroneous price
deviation limits have been reduced to bring them in line with the LMEselect error trade policy.
4.6 Revision – July 2012
It has been decided to reduce the limits for the Maximum Erroneous Price Deviation limit to the
above figures. (The previous limit numbers are below in Section 5). This decision was based on the
discussion with the LMEselect Forum Group and the LMEselect team’s observations of orders being
placed by Member firms and their clients. The current LMEselect Error Trade Policy details a 2% nocancellation range for outright trades transacted within this range of the previous good trade. It was
felt that the Maximum Erroneous Price Deviation limit should be moved more in-line with this policy to
help eradicate the placement of orders with a potential trade price being a considerable distance
away from the prevailing market, which may cause sudden price spikes or dips especially during
periods of low liquidity. Therefore, the Maximum Price Deviation limits have been reduced to
approximately 2% or a minimum of US$50. The US$50 minimum limit was felt to be required due to
potential price volatility particularly in contracts that typically have limited liquidity. The exception to
these limits is the Cobalt and Molybdenum contracts. As they rarely trade on LMEselect and have
very limited liquidity and price depth it was decided to have a Maximum Price Deviation limit of
US$2000.
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For further information please contact the Trading Operations via Tel +44 207 113 8200 or email
[email protected].
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