Jan. 8, 2007 — London Metal Exchange Chief Executive Martin Abbott announced a new “2-by-2” growth strategy for the LME.

Designed to double the LME’s volume of business within the next three to five years, the “2-by-2” strategy is built around a focused development of two swathes of organic growth: from nonferrous into ferrous, and from Futures into OTC trading.

The principle features of the “2 by 2” strategy are to bolster the LME’s existing suite of deliverable, non-ferrous futures contracts with:

• Financially settled non-ferrous Futures contracts;
• Cleared non-ferrous OTC contracts;
• Steel Futures and OTC contracts ; and
• Bilateral and cleared OTC contracts in other metals.

The Exchange has started a wide-ranging consultation on the strategy with shareholders. Based on the shareholder discussions, an implementation plan will be formulated and presented to the Board within the first quarter of 2007.

Commenting on the strategy, LME Chief Executive Martin Abbott said, “There is no “for sale” sign over the LME. As far as I am aware, none of my shareholders is asking me to take the Exchange down that route. What they are asking me to do is to ensure the provision of orderly, liquid markets in a range of instruments for which there is genuine market demand. There is certainly room in the exchange space for a stand-alone, metals-focused exchange that does this.

“The LME has been the world leader in non-ferrous metals trading for 130 years. My vision for the LME is powerfully simple: to strengthen this leadership and extend it into areas where the LME has true competitive advantage. Our links with industry will remain strong, and will deepen further. The “2-by-2” strategy is tailored to the LME’s unique combination of skills, experience and relationships. Most importantly, it will deliver enormous opportunity to the LME’s members, industry and the financial community.”

The LME is a demutualized, shareholder-owned organization that currently operates a model in which fees are kept to a minimum and all surpluses are rebated to shareholders. The LME had volumes of 78 million lots in 2005. Although not yet announced, 2006 volumes are likely to exceed th2 2005 total.