London Metal Exchange

The London Metal Exchange (LME) is the world's largest market in metals. The activities are organised into categories.^[1]

The main categories are forward contracts, futures contracts and options on base metals. Forward contracts decide the price at a time in the future. Futures contracts set the price for delivery at a specific time, but is between parties not yet known to each other. Options are the right but not the obligation to buy or sell.

The Exchange also offers contracts on ferrous metal (iron(II) oxide) and precious metals. The LME also allows for cash trading. It offers hedging, an investment to avoid loss, worldwide reference pricing, and the option of physical delivery to settle contracts.

Select traders do go into a ring (of seats), and round the ring are a couple of dozen other traders. These days there are people on phones and many trades are done electronically. "Open-outcry" is the oldest method of dealing, and it is done along with all the modern methods. This qualified to deal in the ring are a select group of nine companies. About 100 other companies do trade at the LME.^[2]

References

1. London Metal Exchange.
2. Financial Times: London Metal Exchange debates its future.