LONDON (Reuters) - The London Metal Exchange is working on a plan to increase the efficiency of electronic trading while its open-outcry ring is closed due to restrictions from the coronavirus pandemic. Below are details of some planned changes. OUTRIGHT PRICES VS CURVE When the LME was forced to close its trading floor in March, it used different systems to calculate outright futures prices and forward spread prices. It switched to volume weighted average pricing (VWAP) to set official prices, a key metric used by mining firms and industrial users in contracts, which has gone well, Chief Executive Matthew Chamberlain said. For the forward curve, however, it stayed with the same system it used when the ring was operating, in which LME staff incorporated all trades in calculating end-of-day spread prices. WHAT IS THE PROBLEM? The LME allows users to lock in prices for individual days for the first three months forward and weekly for up to six months - meaning there are hundreds of potential dates. Problems arise due to different ways of trading popular spreads, such as the difference between the December 2020 and December 2021 contracts, which can be split into smaller separate trades. In the ring, when the price of the wider spread was out of sync with the component parts, it quickly moved back due to arbitrage among ring traders. Those distortions are not always being ironed out in the electronic system. THE SOLUTION The LME proposes to set up a hierarchy of how its staff incorporate trades and quotes into final prices. For example, in the above example, the LME may say that it would prioritise the Dec ‘20/Dec ‘21 price over smaller spreads that make it up. “That would give clarity to the market about which things our trading operations team are going to look at first in compiling their curve, so you don’t end up with an argument at the end of the day,” Chamberlain said.