* Brokers site cite better electronic trading access
* Say trading conditions/rules for minis have improved
By Maytaal Angel
LONDON, Nov 1 (Reuters) - Major London Metal Exchange brokers are taking a belated interest in the previously dormant LME mini metal contracts, metals industry sources told Reuters on Monday, saying the contracts may yet take off.
The news comes ahead of plans by the LME and the Singapore Exchange (SGX) to launch copper and zinc cash-settled minis cleared through SGX by the first quarter of next year -- part of the LME's bid to increase its footprint in Asia.
The LME originally launched small-size, cash-settled, monthly copper, aluminium and zinc futures contracts in December 2006, with one contract or lot equivalent to 5 tonnes as opposed to 25 tonnes for the parent contracts. They traded on the LME Select system.
According to one source, the uptick in interest in the original mini contracts is primarily due to changes in trading conditions and rules since then.
"For the initial launch of LME minis in 2006, only a very few clients plus traders could access mini prices on LME Select, (so) critical mass was not reached," he said.
"The situation today is different -- the inclusion of electronic market-makers, proliferation of client access ... it's likely the LME mini will take off."
Another reason for renewed interest is that brokers have become aware of certain advantages to trading the contracts that were not in place before, the source said.
For example, the LME recently removed the 'order execution limit', or the limit on the ratio of orders to trades for the minis, he said.
Previously, an LME member would have had to complete one trade for every 12 bids or offers entered into the system or risk sanction. At present, the ratio is 20 for full-sized contracts and an unlimited number for minis.
Also of importance, said the source, is an offering by the clearer for LME trades.
"LCH.Clearnet offers a margin offset between the minis and the parent 'big' contract," he said. A margin offset means brokers can cut down the amount of cash they have to lay out on initial trades.
An LME spokesman confirmed that the margin offset was in place and that the order-to-trade ratio had been removed, adding that the LME welcomes any interest by members in the original mini contracts.
"We never delisted the LME minis. They are good products and members are welcome to trade them. We also welcome trading in the new LME-SGX minis when they are launched in due course," he said.
(Reporting by Maytaal Angel. Editing by Jane Baird)