Marex Steers Growth Away From LME Following Fee Hikes

Marex Spectron, a global commodities broker, is looking to expand its metals business into new regions and products outside the London Metal Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term (LME) after fee hikes have led its customers to seek more cost-effective avenues for trading.

Finance Magnates last reported on Marex Spectron in May, when the company announced it was looking to capture new business from banks in response to them scaling back their commodities operations.

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Marex is reported to have hired new staff to reach into Japan and to add an industrial metals base in Singapore, according to Simon Van Den Born, its global head of metals. He said the additions would boost its regional base metals business now centred in Hong Kong and help build up alternative business lines including gold.

Increased LME Trading Fees

He added: "I would say that the predominant response we get from clients is how can I avoid the LME with its fee structure? People are migrating away from the LME because of that.”

LME was bought by Hong Kong Exchanges and Clearing Clearing Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Clearing is a general term that simply means many different things depending on the subject and related industry. Most commonly, this refers to the reciprocal exchange between banks of checks and drafts, and the settlement of the differences, or the total of claims settled at a clearinghouse. In finance and banking, the word clearing has different meanings depending on the more specific business model. Moving checks from the bank where they were deposited to the bank on which they were drawn. Th Read this Term four years ago for $2.2 billion. Last year, it raised trading fees by an average of 31 percent as it sought to maximise the profit from its investment.

LME volumes declined in 2015 and have fallen 9 percent in the first quarter. In a statement, the exchange said that “volumes fluctuate for reasons including macroeconomic factors. Historically low prices have led to lower hedging activity from the physical industry, which is a significant constituency of the LME market.”

Marex Spectron was formed in 2011 through a merger of metals and oil brokerage firms. The business has since become more diverse, while precious metals have experienced decent growth during the last 2 years.

Van Den Born also said that HKEX's push to develop a monthly contract at the expense of the LME's current structure which encourages daily trade for three months out, was changing the nature of the bourse.

He concluded: "After a while you defund the contract, you just drive towards a cash settled contract rather than a fundamentally physically settled contract which has been the bedrock of the LME."

LME’s increased trading fees may also have been a factor in former LME chief executive Martin Abbott’s decision to set up a rival trading platform as reported last week.