LME Requests Six-Month Delay to Telephone Trading Compliance

The London Metal Exchange (LME) has stated that it will take an extra six months to ensure that trades made via telephone are compliant with new transparency requirements implemented as part of MiFID II. 

The European Securities and Markets Authority (ESMA) initially set a deadline of 1 January 2020 for compliance with the transparency rules set out in MiFID II. 

Most trades made on the LME already adhere to MiFID II’s transparency rules, and waivers apply to most trades which don’t meet the necessary requirements. 

However, ESMA has expressed concern about trades transacted on the LME telephone market. The principal concern here is that bids and offers – that is, pre-trade information – are not published until the final deal has been executed. 

To rectify this, the LME has said that members would accept a ‘systematic fixed price auction’ or ‘FPA’ approach. According to the FPA approach, bids and offers are published, and then trades are actioned following a 30-second delay. 

This approach would ensure compliance with MiFID’s transparency rules. The LME has also claimed that this approach would have the least impact on the market of any alternative. 

However, adopting the FPA approach would entail a range of technical changes to be made which would result in a six-month delay to MiFID II compliance. At present, the LME has said that this system could be in place by mid-2020. 

If ESMA rejects the LME’s proposal, the LME has also said that a ‘manual’ version of this system could be installed in January as a temporary measure. 

Another alternative to the FPA was proposed, but ultimately LME members were not in favour of it. This approach – the customer order and market quoting approach – would result in MiFID compliance, but would also introduce more stages into the trade lifecycle and require members to publish adjustments to fees. The LME expressed concern that this would drive customers away from the LME and to the over-the-counter (OTC) market to avoid higher fees.

Quality Control: Is Sampling Effective in Transaction Reporting?

Quality Control: Is Sampling Effective in Transaction Reporting?Ben Parker, CEO and FounderlinkedintwitterFinancial firms face a complex web of regulatory requirements – with transaction reporting undoubtedly taking the crown as one of the most challenging. Firms need...

Regulatory Responses to Algorithmic Trading

Recent events have pushed algorithmic trading to the front of the financial regulatory agenda. We consider what this might mean for automated trading.

David vs. Goliath or Market Abuse? The Regulatory Challenge Posed by GameStop

David vs. Goliath or Market Abuse? - The Regulatory Challenge Posed by GameStopBen Parker, CEO and FounderlinkedintwitterA New Regulatory Challenge Global financial regulators are eyeing up new controls on market manipulation following the widely reported GameStop...

UK, MAR and Market Abuse After Brexit – The New Regime Explained

The UK, MAR and Market Abuse After Brexit - The New Regime ExplainedDouglas Moffat, New Business ExecutivelinkedintwitterMAR and Market Abuse After Brexit Market abuse is a serious concern for financial regulators. It’s why the European Union sought to further codify...

Technology, Compliance & COVID: The 2021 Thomson Reuters Regulatory Report

Technology, Compliance & COVID 19: Unwrapping Thompson Reuters’ 2021 Report on FinTech, RegTech and the Role of Compliance Ben Parker, Director and Founder linkedintwitterAn increased reliance on technology, continued investment in compliance, and predictably...

Get In Touch

[contact-form-7 id="26302" title="AMP Form 2"]
MENU