LME launches real-time testing platform for trading strategie
The London Metal Exchange (LME) has launched a real-time synthetic test environment for members and their clients. The new system, LMEstage, will help to ensure market integrity by providing a simulated live market environment in which users can test their trading strategies.
“Clients can achieve much more with LMEstage than with traditional testing methods, because our system provides a fully interactive and dynamic environment that mirrors live trading behaviour on the LME’s electronic trading platform, LMEselect,” said Robin Paine, the LME’s Chief Technology Officer. “Existing testing methods generally involve back-testing using historical market data, while LMEstage provides higher confidence for users by producing a more accurate reflection of the real market.”
LMEstage is also ideal to help firms demonstrate that their processes conform to the recommended testing practices as set out in the European Securities and Markets Authority (ESMA) guidelines.
Using custom algorithms that generate order flow, LMEstage enables clients to test their trading strategies and supporting systems in an environment that is similar to, but not identical to, the live market. In addition, the LME can stress the simulated market in a variety of ways, for example, by providing strong directional price pressure or high order rates.
LMEstage, one of the first systems of its kind, is immediately available to category 1 and 2 members and their clients, as well as independent software vendors (ISVs).
About the London Metal Exchange
The London Metal Exchange, a member of HKEx Group, is the world centre for industrial metals trading.
More than 80% of global non-ferrous metals business is conducted on our three trading platforms: LMEselect (electronic), the Ring (open outcry) and the 24-hour telephone market. The world’s metal community uses the LME to trade futures, options, and our latest contract, LMEswaps, to hedge against adverse price movements – prices which are discovered on our markets and used as the global benchmark.
Participants can trade aluminium, copper, tin, nickel, zinc, lead, molybdenum, cobalt, steel billet and two regional aluminium alloy contracts. In 2013, 171.1 million lots were traded on the LME, the equivalent of 4.0 billion tonnes and $14.6 trillion in notional value.
At the close of the year, 7.4 million tonnes of material was held on LME warrant in 732 storage facilities across 37 locations internationally.