London Metal Exchange to press ahead with prohibition of discretionary order type
The London Metal Exchange (LME) is pressing ahead with the prohibition on the use of the discretionary order type for all tradeable Contracts and the iceberg order type for Cash-Settled Futures Contracts.
Following a consultation on the matter, LME has announced that it will implement the prohibition.
However, in the light of the feedback received from respondents, the LME will extend the implementation deadline to market open on January 25, 202. Additionally, the LME will extend the Prohibition relating to iceberg orders to include all Monthly Average Futures Contracts (MAFs) and to all LMEmini Contracts (in addition to Cash-Settled Futures, mentioned in the Consultation Notice).
During the period from the date of this Notice until the Effective Date, the LME expects Member to assess their usage of the relevant native order types and use this period to implement appropriate compliance controls. In parallel with this, the LME will collate usage statistics and will communicate periodically with Members that continue to submit these order types by way of native functionality during this period.
Members that contravene the Prohibition will be deemed to have failed to comply with the LME Rules. Failure to comply with the Prohibition or failure to implement appropriate controls may result in a Member being subject to an investigation and disciplinary action by the LME.
The Exchange will monitor activity on LMEselect for indications that orders have been placed in contravention of the Prohibition. This monitoring activity will help the LME to ensure that it can effectively enforce the Prohibition but should not be relied on as a replacement for Members implementing appropriate arrangements to comply with the Prohibition.
Where orders subject to the Prohibition are identified by the LME, the LME will have the power to cancel, or require that a Member cancel, the relevant order or (where applicable) arrange for their DEA Client to do so. The LME expects cancellations to be effected as soon as reasonably practicable.
For the avoidance of doubt, and taking into account the LME’s obligations to maintain an orderly market, the LME shall not cancel, or require Members to cancel, trades that result from an order that is submitted using an order type that is subject to the Prohibition. In these circumstances, the LME will contact the Member to understand the relevant circumstances in the first instance and may ultimately open an investigation and take enforcement action.