The London Metal Exchange (LME) has approved global market maker Optiver as a Category 4 member, giving the firm greater trading access to the exchange’s metals market.
Optiver Joins LME Membership
Founded in Amsterdam, Optiver provides liquidity across listed derivatives, cash equities , ETFs, bonds, and foreign currencies. As a Category 4 member, it can trade on its own account and for clients, while using a Category 1 or 2 member for clearing. The LME will confirm the date when Optiver starts trading.
Optiver’s Chief Operating Officer, John Rothstein, has joined the LME’s User Committee, while Ed Sternberg, Head of Metals Trading, has joined the Traded Options Committee. LME CEO Matthew Chamberlain said the membership is expected to add liquidity to the market.
The LME is developing its electronic options offering to modernise the metals market. Optiver’s experience in global options trading is expected to support this initiative and attract more participants to the exchange.
Related: London Metal Exchange Sent Junior Staff on Night Shift, Now Must Pay FCA Over £9 Million Fine
Meanwhile, the Financial Conduct Authority imposed a £9.2 million fine on the LME in March for failing to maintain adequate systems and controls during extreme market volatility. It marked the regulator’s first enforcement action against a UK “Recognized Investment Exchange.”
FCA Fined London Metal Exchange £9.2 Million
The penalty related to events between March 4–8, 2022, when the LME’s 3-month nickel futures contract underwent unprecedented price swings. On March 8, prices more than doubled to over $100,000 in just over an hour, prompting the exchange to suspend its nickel market for eight days and cancel all nickel trades executed that day.
According to the FCA, the LME’s systems and controls were not sufficient to ensure orderly trading under conditions of severe market stress. In particular, the exchange lacked adequate controls and policies for its automatic volatility mechanisms, known as “price bands.”
“The LME's systems and controls were not adequate to ensure orderly trading under conditions of severe market stress,” the FCA said in its enforcement action. “Specifically, the exchange lacked proper controls and policies for its automatic volatility controls, known as “price bands.”
