CME Takes on London’s Aluminum Dominance

The Chicago-based group launches its own contract for the huge aluminum market

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Aly Song / Reuters

Workers ride on an motor rickshaw through an aluminium ingots depot in Wuxi, Jiangsu province September 26, 2012.

London Metal Exchange (LME), the world’s leading metal futures exchange, will see its dominance challenged by a CME Group bid to launch its own contract for aluminum.

Since the Soviet Union’s collapse, LME’s contract has been the benchmark for the $90 billion aluminum market, and the metal has accounted for about 40 percent of the exchange’s trading volumes.

Chicago-based CME Group, the world’s largest futures exchange, steps into the aluminum game after a wave of criticism against LME for long delivery queues at the exchange’s warehouses, which have led to a discrepancy between the physical aluminum market and the LME price.

[Financial Times]