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ISRI Submits Comments to London Metal Exchange Regarding Discussion Paper on Market Structure

Mar 19, 2021, 15:15 PM by Rachel Bookman

(Washington, DC) – Serving as the Voice of the Recycling Industry, the Institute of Scrap Recycling Industries (ISRI) today submitted comments to the London Metal Exchange (LME), summarizing viewpoints of its members, regarding LME’s Discussion Paper on Future Market Structure.

ISRI expressed optimism that the LME’s management will incorporate input from its customers and brokers to ensure that credit is available to customers who need it. However, ISRI highlights areas of concern and opposition regarding changes that would limit the ability of LME member dealers to extend credit lines, the potential move to 24 hour electronic trading, and other changes that could prove detrimental for recyclers and other industries that deal in physical metal.

Excerpts from ISRI’s comments follow (full text of comments)

…  ISRI Nonferrous Division members have expressed the following concerns regarding the proposed changes contained in the Discussion Paper:

  1. While ISRI Nonferrous Division members have voiced their appreciation for the tradition and function of the physical ring/open outcry, a number of members have expressed their adamant opposition to any changes that will affect the ability of LME member dealers to extend credit lines. …
  2. … drawbacks related to the change from a discounted contingent variation margin system to a realized variation margin system include potential mismatches between physical hedges and the exposure of the LME contracts …
  3. … members are also concerned that the proposed changes will result in increased transaction costs and brokerage fees, which in turn will inhibit scrap recyclers’ ability to hedge their price risk exposure, particularly for small and medium sized businesses.
  4. … increased electronic trading could be detrimental for manufacturers, scrap dealers, and other market participants that deal in physical metal …
  5. … members have expressed concern that the move to 24 hour electronic LME trading will shift market control from physical market participants to commodity traders, compounding traders’ undue market influence and opportunities for market manipulation.



The Institute of Scrap Recycling Industries, Inc. (ISRI) is the "Voice of the Recycling Industry™." ISRI represents 1,300 companies in 20 chapters in the U.S. and more than 40 countries that process, broker, and consume scrap commodities, including metals, paper, plastics, glass, rubber, electronics, and textiles. With headquarters in Washington, DC, the Institute provides education, advocacy, safety and compliance training, and promotes public awareness of the vital role recycling plays in the U.S. economy, global trade, the environment and sustainable development. Generating nearly $110 billion annually in U.S. economic activity, the scrap recycling industry provides more than 500,000 Americans with good jobs.

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