LME targets Asian retail investors with USD mini contracts in Hong Kong

The London Metal Exchange is targeting Asian retail investors amid interest in the region, its CEO, Matthew Chamberlain, told CNBC on Tuesday.

The Hong Kong Futures Exchange (HKEX), which bought the LME in 2012, will be launching dollar-denominated mini contracts for six base metals in the coming months. The standardized monthly futures contracts will reference LME prices.

“We actually see pretty good volumes on our main contract in Asian trading hours, but … if you’re an Asian investor, you have to really work hard to get your business to London, to get your business to our main market in those Asian trading hours,” Chamberlain said on CNBC’s “Squawk Box.”

“It’s really the guys who truly care about metal that are trading there. What we want to do (is that) we want to provide an easier way for a broader set of Asian investors to participate in that liquidity,” he added.

The LME’s major contracts are copper, aluminium, zinc, lead, nickel and tin.

The mini contracts are smaller than the contracts at the London exchange: with copper, aluminium, zinc and lead in five metric ton lots and tin and nickel in one metric ton lots. HKEX already has mini contracts traded in China’s yuan currency.

As one of the main metal markets in the world, the exchange facilitates the risk management of investing in metals, through highly liquid and standardized exchange-traded futures contracts.

The new offerings come five years after a similar product did not take off on the Singapore Exchange and as mini metals contracts tradable in London saw no volumes last year.

SGX launched mini metals contracts in 2011, but wound them down in 2014 after they failed to gain traction.

Chamberlain, however, said he was confident there was ample liquidity already available from Asian investors on the LME to support the new mini contracts in Hong Kong.

— Reuters contributed to this report.