These contracts provide the metal community with the opportunity to hedge against adverse movements in the Monthly Average Settlement Price (MASP) and are financially settled for difference between this ‘floating’ average price and an agreed-now ‘fixed’ price.

Globally, many non-ferrous metals transactions are conducted with reference to a Quotational Period based on the monthly average of LME Settlement Prices. LMEswaps, the LME’s new facility for trading and clearing contracts based on these monthly averages, not only simplifies hedging, but also provides greater transparency to the market by bringing visibility to the turnover and valuations of these contracts.