LME to Extend Plastics Shelf-Life and Introduce Additional Prompt Dates

23-May-06

On the anniversary of the launch of its plastics futures contracts, The London Metal Exchange (LME) is announcing a number of enhancements to the contracts. These include the extension of the material shelf-life and the introduction of additional prompt dates to supplement the current single monthly prompt date system. Full details of the changes will be explained on Thursday of this week at the LME's Plastics Seminar, 'Entering a New Cycle: The Challenge of Greater Optimisation'." Shelf-Life Extension Effective from 3 July 2006, the time period that PP and LL Plastics Warrants will remain deliverable against an LME contract will be extended from 10 months to 36 months from production. The Exchange will explore the feasibility of introducing a discounting process for product delivered towards the end of its shelf-life. Existing Warrants will be 'grandfathered' into the new extended shelf-life period. Additional Prompt Dates The change to the prompt date system will mean that, at all times, trading will be possible for settlement in two working days time (Cash), and in addition, trading for the next business day (Cash Today or TOM short) will be allowed. Trading will also be possible for settlement on the first five calendar Wednesdays, inclusive of Third Wednesdays. The confirmation of the commencement of the additional prompt dates requires the completion of detailed planning across a number of complex IT systems. Once this project planning is completed, the LME will confirm the start date of the trading in the additional prompt dates. Both changes are the result of recommendations from the LME Plastics Committee, which includes representatives from the plastics industry. Commenting on the announcement, Neil Banks, Director of Exchange Development said: "The contracts are trading as we expected and our research and feedback suggests that it's the right time to make further enhancements. The new developments will make a significant contribution to the liquidity of the contracts and their increased use within the industry."