Post by Sapphire Capital on Jul 12, 2008 22:49:56 GMT 4
LONDON METAL EXCHANGE
536 - Special Committee Notice
---------From General Counsel and Head of Enforcement
To: ALL MEMBERS
Ref: 07/135: A132
Date: 6 June 2007
Subject: MODIFICATION OF LENDING GUIDANCE IN RELATION TO NICKEL
Summary
1 The Special Committee has decided to modify the lending guidance in
respect of those with nickel positions by introducing new levels at which the
holder(s) of dominant long positions are required to lend nickel. This
modification shall apply in relation to nickel positions with effect from
0001hrs on 7 June 2007 until further notice. The application of the existing
Lending Guidance in relation to all other metals is unaffected.
Existing Lending Guidance
2 Market Aberrations: The Way Forward was published by the Exchange
in October 1998 as an attachment to LME notice 98/363 : A351 : W072.
Paragraph 13.24 of the Market Aberrations document sets out the Lending
Guidance that applies to the holders of dominant long positions in the LME
metal markets (the “Lending Guidance”).
3 In respect of those holding dominant long positions in nickel, the
Lending Guidance provides as follows:
(i) If at any time a member or client holds 50% or more of the warrants
and/or cash today/cash positions in relation to stocks, he should be prepared
to lend, if asked, at no more than a premium of 0.5% of the cash price for a
day to reduce his position below 50%. After five successive days, he should
be prepared to lend, if asked, at no more than a premium of 0.25% of the cash
price for a day.
(ii) If at any time a member or client holds 80% or more of the warrants
and/or cash today/cash positions in relation to stocks, he should be prepared
to lend, if asked, at no more than a premium of 0.25% of the cash price for a
day to reduce his position below 80%. After five successive days, the
maximum premium would fall to 0.15%.
(iii) If at any time a member or client holds 90% or more of the warrants
and/or cash today/cash positions in relation to stocks, he should be prepared
to lend, if asked, at no more than the cash price to reduce his position below
90%.
Special Committee Action
4 After taking account of all of the relevant factors and consulting with the
Financial Services Authority, the Special Committee has resolved to modify
the Lending Guidance in circumstances where two or more members or
clients each hold 25% or more of the warrants and/or cash today/cash
positions in relation to nickel stocks as described below. This modification
shall have effect from 0001hrs on 7 June 2007 until further notice.
Introduction of New Lending Requirements
5 If at any time two or more members or clients each hold 25% or more
of the warrants and/or cash today/cash positions in relation to nickel stocks
the existing Lending Guidance shall be modified as follows:
(a) Two Position Holders of 25% or more each
If at any time two members or clients each hold 25% or more of the
warrants and/or cash today/cash positions in relation to nickel stocks:
(i) if either (or both) hold(s) 45% or more of the warrants and/or
cash today/cash positions in relation to stocks, he/they should
be prepared to lend, if asked, at no more than the cash price to
reduce his position below 45%;
(ii) if either (or both) hold(s) 40% or more of the warrants and/or
cash today/cash positions in relation to stocks, he/they should
be prepared to lend, if asked, at no more than a premium of
0.25% of the cash price for a day to reduce his position below
40%; and
(iii) each should be prepared to lend, if asked, at no more than a
premium of 0.5% of the cash price for a day to reduce his
position below 25%.
(b) Three Position Holders of 25% or more each
If at any time three members or clients each hold 25% or more of the
warrants and/or cash today/cash positions in relation to nickel stocks,
(i) if any one or more of the three holds 30% or more of the
warrants and/or cash today/cash positions in relation to stocks,
he/they should be prepared to lend, if asked, at no more than
the cash price to reduce his position below 30%;
(ii) if any one or more of the three holds 26.66% or more of the
warrants and/or cash today/cash positions in relation to stocks,
he/they should be prepared to lend, if asked, at no more than a
premium of 0.25% of the cash price for a day to reduce his
position below 26.66%; and
(iii) each should be prepared to lend, if asked, at no more than a
premium of 0.5% of the cash price for a day to reduce his
position below 16.66%.
(c) Four Position Holders of 25% or more each
If at any time four members or clients each hold 25% or more of the
warrants and/or cash today/cash positions in relation to nickel stocks:
(i) each should be prepared to lend, if asked, at no more than the
cash price to reduce his position below 22.5%;
(ii) each should be prepared to lend, if asked, at no more than a
premium of 0.25% of the cash price for a day to reduce his
position below 20%; and
(iii) each should be prepared to lend, if asked, at no more than a
premium of 0.5% of the cash price for a day to reduce his
position below 12.5%.
(d) Five Position Holders of 25% or more each
If at any time five members or clients each hold 25% or more of the
warrants and/or cash today/cash positions in relation to nickel stocks:
(i) each should be prepared to lend, if asked, at no more than the
cash price to reduce his position below 18%;
(ii) each should be prepared to lend, if asked, at no more than a
premium of 0.25% of the cash price for a day to reduce his
position below 16%; and
(iii) each should be prepared to lend, if asked, at no more than a
premium of 0.5% of the cash price for a day to reduce his
position below 10%.
6 In determining the application of this Notice, the LME will aggregate the
positions of a client across all brokers in calculating of dominant positions.
Likewise, the LME will aggregate the positions of a member, its related group
companies and its clients unless the firm can demonstrate that the positions
were independent. Members are reminded of LME notice 01/122, dated 23
March 2001, which deals with arrangements where a party does not hold LME
warrants but has effective control of them.
7 The attention of members is drawn to LME notice 05/009, dated 7
January 2005, which stipulates that the deadline for submitting large position
reports (LPRs) to the Exchange is 8.30am. Members are reminded of the
importance of submitting complete and accurate LPRs by this deadline.
Failure to do so will be regarded as a serious matter.
8 Members or clients holding 25% or more of the warrants and/or cash
today/cash positions in relation to nickel stocks on any day must contact LME
market surveillance no later than 9.30am each day to seek guidance on
whether any of the requirements set out in paragraph 5 above apply to it.
Failure to do so will be regarded as a serious matter.
9 A summary of the modified nickel lending obligations is set out in the
attached Appendix for reference purposes.
Alex Morley
cc: Special Committee
Board directors
Trading Committee
Nickel Committee
Appendix
Lending Guidance in relation to Nickel
Existing Lending Guidance
For all metals except nickel, the existing Lending Guidance will continue to
apply as follows:
Each holder of
50% or more of
warrants and/or
cash today / cash
positions (“WTC
positions”)
Existing Lending
Guidance Applies,
i.e.
50% - <80%
lend at ½%
(changes after 5
days)
Existing Lending
Guidance Applies,
i.e.
80% - <90%
lend at ¼%
(changes after 5
days)
Existing Lending
Guidance Applies,
i.e.
= or >90%
lend at level
Modified Lending Guidance in relation to Nickel
From 7 June 2007 until further notice, the Special Committee has modified the
lending guidance in relation to nickel:
Only one holder of
50% or more of
WTC positions
Existing Lending
Guidance Applies,
i.e.
50% - <80%
lend at ½%
(changes after 5
days)
Existing Lending
Guidance Applies,
i.e.
80% - <90%
lend at ¼%
(changes after 5
days)
Existing Lending
Guidance Applies,
i.e.
= or >90%
lend at level
Two holders of
25% or more each
of WTC positions
25% - <40%
lend at ½%
40% - <45%
lend at ¼%
= or >45%
lend at level
Three holders of
25% or more each
of WTC positions
16.66% - <26.66 %
lend at ½%
26.66% - <30%
lend at ¼%
= or >30%
lend at level
Four holders of
25% or more each
of WTC positions
12.5% - <20%
lend at ½%
20% - <22.5%
lend at ¼%
= or >22.5%
lend at level
Five holders of
25% or more each
of WTC positions
10% - <16%
lend at ½%
16% - <18%
lend at ¼%
= or >18%
lend at level
Note: this Appendix is for reference purposes only, and should not be
relied upon without referring to the full Lending Guidance and the text of
this Notice.
536 - Special Committee Notice
---------From General Counsel and Head of Enforcement
To: ALL MEMBERS
Ref: 07/135: A132
Date: 6 June 2007
Subject: MODIFICATION OF LENDING GUIDANCE IN RELATION TO NICKEL
Summary
1 The Special Committee has decided to modify the lending guidance in
respect of those with nickel positions by introducing new levels at which the
holder(s) of dominant long positions are required to lend nickel. This
modification shall apply in relation to nickel positions with effect from
0001hrs on 7 June 2007 until further notice. The application of the existing
Lending Guidance in relation to all other metals is unaffected.
Existing Lending Guidance
2 Market Aberrations: The Way Forward was published by the Exchange
in October 1998 as an attachment to LME notice 98/363 : A351 : W072.
Paragraph 13.24 of the Market Aberrations document sets out the Lending
Guidance that applies to the holders of dominant long positions in the LME
metal markets (the “Lending Guidance”).
3 In respect of those holding dominant long positions in nickel, the
Lending Guidance provides as follows:
(i) If at any time a member or client holds 50% or more of the warrants
and/or cash today/cash positions in relation to stocks, he should be prepared
to lend, if asked, at no more than a premium of 0.5% of the cash price for a
day to reduce his position below 50%. After five successive days, he should
be prepared to lend, if asked, at no more than a premium of 0.25% of the cash
price for a day.
(ii) If at any time a member or client holds 80% or more of the warrants
and/or cash today/cash positions in relation to stocks, he should be prepared
to lend, if asked, at no more than a premium of 0.25% of the cash price for a
day to reduce his position below 80%. After five successive days, the
maximum premium would fall to 0.15%.
(iii) If at any time a member or client holds 90% or more of the warrants
and/or cash today/cash positions in relation to stocks, he should be prepared
to lend, if asked, at no more than the cash price to reduce his position below
90%.
Special Committee Action
4 After taking account of all of the relevant factors and consulting with the
Financial Services Authority, the Special Committee has resolved to modify
the Lending Guidance in circumstances where two or more members or
clients each hold 25% or more of the warrants and/or cash today/cash
positions in relation to nickel stocks as described below. This modification
shall have effect from 0001hrs on 7 June 2007 until further notice.
Introduction of New Lending Requirements
5 If at any time two or more members or clients each hold 25% or more
of the warrants and/or cash today/cash positions in relation to nickel stocks
the existing Lending Guidance shall be modified as follows:
(a) Two Position Holders of 25% or more each
If at any time two members or clients each hold 25% or more of the
warrants and/or cash today/cash positions in relation to nickel stocks:
(i) if either (or both) hold(s) 45% or more of the warrants and/or
cash today/cash positions in relation to stocks, he/they should
be prepared to lend, if asked, at no more than the cash price to
reduce his position below 45%;
(ii) if either (or both) hold(s) 40% or more of the warrants and/or
cash today/cash positions in relation to stocks, he/they should
be prepared to lend, if asked, at no more than a premium of
0.25% of the cash price for a day to reduce his position below
40%; and
(iii) each should be prepared to lend, if asked, at no more than a
premium of 0.5% of the cash price for a day to reduce his
position below 25%.
(b) Three Position Holders of 25% or more each
If at any time three members or clients each hold 25% or more of the
warrants and/or cash today/cash positions in relation to nickel stocks,
(i) if any one or more of the three holds 30% or more of the
warrants and/or cash today/cash positions in relation to stocks,
he/they should be prepared to lend, if asked, at no more than
the cash price to reduce his position below 30%;
(ii) if any one or more of the three holds 26.66% or more of the
warrants and/or cash today/cash positions in relation to stocks,
he/they should be prepared to lend, if asked, at no more than a
premium of 0.25% of the cash price for a day to reduce his
position below 26.66%; and
(iii) each should be prepared to lend, if asked, at no more than a
premium of 0.5% of the cash price for a day to reduce his
position below 16.66%.
(c) Four Position Holders of 25% or more each
If at any time four members or clients each hold 25% or more of the
warrants and/or cash today/cash positions in relation to nickel stocks:
(i) each should be prepared to lend, if asked, at no more than the
cash price to reduce his position below 22.5%;
(ii) each should be prepared to lend, if asked, at no more than a
premium of 0.25% of the cash price for a day to reduce his
position below 20%; and
(iii) each should be prepared to lend, if asked, at no more than a
premium of 0.5% of the cash price for a day to reduce his
position below 12.5%.
(d) Five Position Holders of 25% or more each
If at any time five members or clients each hold 25% or more of the
warrants and/or cash today/cash positions in relation to nickel stocks:
(i) each should be prepared to lend, if asked, at no more than the
cash price to reduce his position below 18%;
(ii) each should be prepared to lend, if asked, at no more than a
premium of 0.25% of the cash price for a day to reduce his
position below 16%; and
(iii) each should be prepared to lend, if asked, at no more than a
premium of 0.5% of the cash price for a day to reduce his
position below 10%.
6 In determining the application of this Notice, the LME will aggregate the
positions of a client across all brokers in calculating of dominant positions.
Likewise, the LME will aggregate the positions of a member, its related group
companies and its clients unless the firm can demonstrate that the positions
were independent. Members are reminded of LME notice 01/122, dated 23
March 2001, which deals with arrangements where a party does not hold LME
warrants but has effective control of them.
7 The attention of members is drawn to LME notice 05/009, dated 7
January 2005, which stipulates that the deadline for submitting large position
reports (LPRs) to the Exchange is 8.30am. Members are reminded of the
importance of submitting complete and accurate LPRs by this deadline.
Failure to do so will be regarded as a serious matter.
8 Members or clients holding 25% or more of the warrants and/or cash
today/cash positions in relation to nickel stocks on any day must contact LME
market surveillance no later than 9.30am each day to seek guidance on
whether any of the requirements set out in paragraph 5 above apply to it.
Failure to do so will be regarded as a serious matter.
9 A summary of the modified nickel lending obligations is set out in the
attached Appendix for reference purposes.
Alex Morley
cc: Special Committee
Board directors
Trading Committee
Nickel Committee
Appendix
Lending Guidance in relation to Nickel
Existing Lending Guidance
For all metals except nickel, the existing Lending Guidance will continue to
apply as follows:
Each holder of
50% or more of
warrants and/or
cash today / cash
positions (“WTC
positions”)
Existing Lending
Guidance Applies,
i.e.
50% - <80%
lend at ½%
(changes after 5
days)
Existing Lending
Guidance Applies,
i.e.
80% - <90%
lend at ¼%
(changes after 5
days)
Existing Lending
Guidance Applies,
i.e.
= or >90%
lend at level
Modified Lending Guidance in relation to Nickel
From 7 June 2007 until further notice, the Special Committee has modified the
lending guidance in relation to nickel:
Only one holder of
50% or more of
WTC positions
Existing Lending
Guidance Applies,
i.e.
50% - <80%
lend at ½%
(changes after 5
days)
Existing Lending
Guidance Applies,
i.e.
80% - <90%
lend at ¼%
(changes after 5
days)
Existing Lending
Guidance Applies,
i.e.
= or >90%
lend at level
Two holders of
25% or more each
of WTC positions
25% - <40%
lend at ½%
40% - <45%
lend at ¼%
= or >45%
lend at level
Three holders of
25% or more each
of WTC positions
16.66% - <26.66 %
lend at ½%
26.66% - <30%
lend at ¼%
= or >30%
lend at level
Four holders of
25% or more each
of WTC positions
12.5% - <20%
lend at ½%
20% - <22.5%
lend at ¼%
= or >22.5%
lend at level
Five holders of
25% or more each
of WTC positions
10% - <16%
lend at ½%
16% - <18%
lend at ¼%
= or >18%
lend at level
Note: this Appendix is for reference purposes only, and should not be
relied upon without referring to the full Lending Guidance and the text of
this Notice.