London — The LME on Friday announced a new service for booking give-up trades and a corresponding change to volume reporting that it said would provide the market with greater clarity, transparency and comparability in line with Europe's new MiFID II regulations for financial markets.
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During a briefing on the changes, LME said the service allows members to book give-up trades in compliance with the regulations through a system called UNA (unallocated) trades.
It was introduced in January, and the LME said that members using it so far have found it useful and are using UNAs for a broad range of purposes. The service is free to members.
The LME said that in line with the change, alongside publishing its usual reports with average daily volumes, it would "now additionally publish a breakdown of ADV excluding UNA trades in its monthly reports."
Average daily volume was 712,722 in January, LME said, while ADV excluding UNA trades came in at 622,560.
It plans to use this format in the LME monthly volumes spreadsheets representing all metals traded daily. For the time being, there will not be metal-specific breakdowns.
The LME Chief Executive Matthew Chamberlain said that UNAs are "helpful for LME members for booking and workflow processing."
With a give-up trade, one broker trades on behalf of another such as if the latter is unable to handle a client's request at the time.
The trade shows details for the client's actual broker, rather than the one who executed the trade.
The new service instead creates three reportable trades instead of one, giving more details of the give-up trade and thus providing more transparency, in line with MiFID II, LME said.
LME said that while a normal give-up trade goes straight between the executor and the clearer, the UNA give-up trade would move from the executor to UNA, back to the executor and on to the clearer.
In addition to UNAs, the LME introduced fee discounts for short and medium-dated carries in October and November last year.
The LME starting from February 2018 will also begin to publish a breakdown of these carry volumes excluding UNA trades, "in order to show the impact of the fee changes on carry volumes."