The Hindu Business Line : LME signs licensing pact with Multi Commodity Exchange

(From right) Mr Simon Heale, Chief Executive Officer, London Metal Exchange Ltd; with Lord Bagri CBE, Honorary President, LME; and Mr Jignesh Shah, MD & CEO, Multi Commodity Exchange of India Ltd, at a press conference in Mumbai on Tuesday. — Paul Noronha

Mumbai , Oct. 25

THE London Metal Exchange (LME) on Tuesday announced that it had signed a licensing agreement with Multi Commodity Exchange of India Ltd (MCX) to allow the use of LME price as the basis of settlement of MCX contracts.

The deal starts immediately and will be for an initial three-year period. Pricing will be in Indian rupees.

"The agreement will initially apply to MCX contracts for aluminium, tin and nickel in small lot sizes of 1 tonne which would be soon followed by launch of copper contract in the first quarter," the MCX Chief Executive Officer and Managing Director, Mr Jignesh Shah, told presspersons here. The agreement would enable a better understanding of the market dynamics of the base metals industry in India.

It would integrate the Indian market and participants with the global market more effectively and foster world-class practices in commodity futures market regulation and operations, he said.

"This is a unique agreement for the LME and it will reinforce the LME price as the only true global benchmark for the contracts that we trade. Additionally, it forges an important link with an ambitious and dynamic organisation which is currently the fastest growing exchange in India," Lord Bagri CBE told newspersons here. Lord Bagri is the Chairman of the Metdist Group of Companies and is currently the Honorary President of LME. Commenting on the announcement, Mr Simon Heale, LME Chief Executive Officer, said: "The agreement is real, it sets out tangible activities rather than a mere willingness to agree to talk about working together and as such, it has the potential to bring significant benefits to both parties. MCX is growing faster than other exchanges."

"The agreement is valid for non-ferrous metals but plastics could be worked out in future," he said. The LME commenced trading in polypropylene and linear low-density polyethylene futures contracts in May last. "The LME is planning to launch steel futures contract. We are having a meeting on October 28 where things would be clearer. About any other commodity that the LME was looking to take up with MCX," he said.

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