What is LME & how does it work?

It is the largest exchange for options and futures contracts for base metals, which include aluminum, zinc, lead, copper, and nickel. The exchange also facilitates trading of precious metals like gold and silver. The LME is located in London, England, but has been owned by Hong Kong Exchanges and Clearing since 2012.

What is the London Metal Exchange (LME)?

The London Metal Exchange (LME) is a commodities exchange that deals in metals futures and options. It is the largest exchange for options and futures contracts for base metals, which include aluminum, zinc, lead, copper, and nickel. The exchange also facilitates trading of precious metals like gold and silver.

Where did the LME come from?

Although the LME was formally founded in 1877, its origins trace back to the reign of Queen Elizabeth I. In 1571, traders formed the Royal Exchange in London to trade physical metals for the domestic market. However, as Britain’s international role expanded, the nation soon became a leading exporter of metals.

What is the IS-LM model?

The IS-LM model, which stands for “investment-saving” (IS) and “liquidity preference-money supply” (LM) is a Keynesian macroeconomic model that shows how the market for economic goods (IS) interacts with the loanable funds market (LM) or money market.