London Metal Exchange - LME

AAA

DEFINITION of 'London Metal Exchange - LME'

A commodities exchange in London, England, that deals in metal futures. Contracts on the exchange include aluminum, copper and zinc. Trading on the LME can be done in three main ways: through open outcry, a telephone system between member companies or the LME Select, an electronic trading platform. The LME is a non-ferrous exchange, which means that iron and steel are not traded on the exchange.

INVESTOPEDIA EXPLAINS 'London Metal Exchange - LME'

The LME is one of the main metal markets in the world and allows for the hedging of metals risk through highly liquid and standardized exchange-traded futures contracts. The LME also trades plastics on its exchange and has an LME index option that allows traders to speculate or hedge the broader metals market as a whole.

RELATED TERMS
  1. Ring Trading

    The method by which certain types of investment business is conducted ...
  2. Association Of Futures Brokers ...

    An organization established by the major London futures exchanges ...
  3. Open Outcry

    A vanishing method of communicating on a stock, commodity or ...
  4. Futures

    A financial contract obligating the buyer to purchase an asset ...
  5. New York Mercantile Exchange - ...

    The world's largest physical commodity futures exchange. Trading ...
  6. Member

    1. In the most general context, a brokerage firm (or broker) ...
RELATED FAQS
  1. How can traders use contango to take advantage of the storage shortage for crude ...

    Traders with access to physical oil and storage can make substantial profits in a contango market. Other traders may seek ... Read Full Answer >>
  2. How can I profit from a decline in the drugs sector?

    Profit from a decline in the drugs sector by short selling or by purchasing futures contracts or put options. Investors use ... Read Full Answer >>
  3. What other options does an investor have to buying physical silver?

    A wide variety of investment options are available to traders wishing to invest in the silver market. Buying physical silver ... Read Full Answer >>
  4. How can I profit from a fall in the automotive sector?

    You can profit from a fall in the automotive sector by short selling automotive stocks and exchange-traded funds (ETFs) or ... Read Full Answer >>
  5. What does it mean to invest in base metals?

    Portfolio diversification is a necessity for most investors; it provides a smart way to spread out the risk associated with ... Read Full Answer >>
  6. Does a negative correlation between two stocks mean anything?

    Negative correlation with regard to stocks means two individual stocks have a statistical relationship such that they generally ... Read Full Answer >>
Related Articles
  1. Options & Futures

    Options On Futures: A World Of Potential Profit

    There's one simple hurdle in the transition from stock to futures options: learning about product specifications.
  2. Insurance

    Futures Fundamentals

    For those who are new to futures but want a solid understanding of them, this tutorial explains what futures contracts are, how they work and why investors use them.
  3. Active Trading Fundamentals

    Where And How Should You Make Your First Trade?

    New traders should enter markets that offer the greatest opportunity for learning their craft while keeping risk at a minimum.
  4. Credit & Loans

    What It Costs To Study Abroad In London

    Studying in London puts you right at the center of a cultural, academic and business hub. And careful budgeting will get you there. Here's how.
  5. Options & Futures

    Introduction To Trading In Oil Futures

    An introduction to oil futures, how the market arrives at oil futures prices, what futures prices mean, and how investors can exploit them.
  6. Options & Futures

    How To Lock In Low Oil & Gas Prices

    We provide a quick overview of how companies can manage the risk of adverse moves in commodity prices by hedging in the futures market.
  7. Active Trading Fundamentals

    Where And How To Trade Energy Stocks

    Energy futures set a high bar to entry for individual traders and investors, redirecting exposure into sector equities and exchange-traded funds.
  8. Forex Strategies

    The 10 Riskiest Investments

    Investors seeking high returns must also be prepared for high risk. Here are ten of the riskiest investments available.
  9. Options & Futures

    Was Buffet Right about Derivatives as WMDs?

    Why Warren Buffet described derivatives as weapons of mass destruction, and when can they be helpful or harmful?
  10. Options & Futures

    Examples Of Exchange-Traded Derivatives

    We look at some of the most common exchange-traded derivatives.

You May Also Like

Hot Definitions
  1. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  2. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  3. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  4. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  5. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
  6. Tangible Net Worth

    A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, ...
Trading Center