1 The long journey – the launch of a commodity futures contract Simon Heale, Chief Executive, LME

2 Two plastics futures contracts launched on 27 May 2005 –Polypropylene (PP) –Linear Low Density Polyethylene (LL) Establishing a new contract

3 The LME dominates base metals So contracts must be commodity related New contracts should not be traded on any other exchange Principles of contract design

4 No competition on any other exchage Similarities to metals –market size –market value –shared end-consumers Industry need –endemic volatility Future potential contracts can be added Why plastics ?

5 What is the intended constituency? Comparing LME and COMEX Copper The value of the LME global warehousing network Advantages of a global contract The global dimension

6 A international benchmark specification Appropriate date system Contracts designed for industry and with industry input Trading mechanisms Defining the contract

7 Trusted mechanism Important feature of an LME contract Approved warehouse locations Approved brands Delivery

8 Aim to create understanding Member involvement vital Press activity consistent and constant Programme of international conferences and road shows Marketing

9 The LME Plastics committee – industry involvement Vital to the success of development and launch Need to embrace people, processes and IT: –professionals in the industry –members organisations at all levels –the clearing house Partnerships

10 Manage expectations It will take time But… Challenges

11 Manage expectations It will take time But… …it will be successful! Challenges

12 The long journey – the launch of a commodity futures contract Simon Heale, Chief Executive, LME