Vendor Group Defies London Metal Exchange On Data Fee Plan; Resolution Said To Be Near On Per-Terminal Charge

A group of quote vendors and the London Metal Exchange are said to be near agreement in a dispute over fees to be charged for the new LME ticker (MTR, February 1988). The exchange, sources say, is ready to scuttle its original plan to charge a hefty flat rate for access to the data feed and to substitute a more conventional per-terminal charge.

The argument began after the LME advised that vendors would have to pay a fixed annual fee of 50,000 pounds sterling in order to distribute the data feed. The group of vendors -- said to include Bridge, ICV Information Systems, Knight-Ridder/Unicom, Pont, Quotron, and Telerate -- sent a joint letter to the LME complaining that such a fee would discriminate against small vendors (although not all of the vendors who signed exactly qualify as small).

Complicating matters is the fact that the feed is being produced and managed by Reuters, Ltd., which probably has more subscribers to LME data than everyone else put together, and which, sources say, was due to receive a cut of the annual fee. And despite assurances to the contrary from both the LME and Reuters, the other vendors also worry that somehow Reuters will end up with better-quality data.

"The LME would make a lot more money if it charged some sort of end-user fee instead of charging a flat fee, because that would encourage every vendor to take the feed and make it available to clients worldwide," says David Taylor, managing director at ICV Information Systems, Ltd.

"That is an ongoing argument," says Michael Brown, LME chief executive officer. "Quite simply, they want [the feed] but they don't want to pay the money." Nonetheless, Brown says settling the dispute is "number one on [the] agenda" of LME finance director David King when he returns from vacation.

Vendors in the group, while adamant that the LME plan must go, are trying to keep the disharmony out of public view. One, who asks not to be identified, says he is "very hopeful" that a terminal-based fee structure in line with "common practice" in the rest of the industry will be in place soon. "We're right at the edge," he says.

Meanwhile, tests of the feed are proceeding. Although the LME is said to be not yet fully satisfied with the quality of its price reporting, plans are moving ahead to begin commercial operation. "We're more or less at the stage where we're going live and divorcing it from what Reuters has been doing," says Brown. "In other words, the LME will be taking over the responsibility for the reporting of the LME prices. But at the moment it's still running in tandem."