Case Study

Abstract

The LMEX index provides one single, liquid reference point that tracks the performance of the non–ferrous metals contracts traded on the London Metal Exchange. Developed primarily as an investment vehicle, LMEX futures and traded options contracts provide an opportunity for investors and fund managers to improve the base risk/return characteristics of investment portfolios. For investors new to metals trading, LMEX contracts provide users with an easily managed exposure to LME's primary metals without the commitment of physical delivery that is an element of the individual metals contracts. In this article, the approach taken to the development of the contract as well as its construction is discussed by way of a series of questions and answers on the LMEX contract.