LME To Return To Ring Trading Next Month, But With Changes

LME To Return To Ring Trading Next Month, But With Changes

The majority of London Metal Exchange (LME) members expect to go back to the trading floor upon reopening next month, but some say the volume may be smaller due to the new hybrid system to be put in place.

The LME’s trading floor was closed for the first time since the Second World War last March due to coronavirus and related shutdowns. After consultations with stakeholders at the LME, the trading organization has decided to reopen on 6 September. However, the reopened LME trading floor will not be the same.

Going forward, prices for LME contracts will be established between 12:30 pm and 1:15 pm. But closing prices will live on the LME’s system LMEselect, which will lead to a drop in volume for certain members. Also, the open-outcry floor will close if the number of ring members is less than six or if volumes fall below a certain level.

At present, Amalgamated Metal Trading, ED&F Man Capital Markets, GF Financial Markets (UK), Marex Financial, StoneX Financial, Sucden Financial, Societe Generale International and CCBI Global Markets (UK) expect to return to the trading floor on 6 September.

Triland Metals announced earlier this month that it would not return to the LME’s floor.

“We will go back to the ring, see how volumes go,” said an unnamed source from one of LME’s floor trading member to Reuters last week.

“We are fully committed to going back to the ring when it reopens with a full complement of staff,” expressed Fred Demler, ED&F Man Capital Markets’ Global Head of Metals.

“Ring trading is difficult if not impossible to replicate on a platform. It provides the liquidity which makes for efficient and reliable pricing, which is critically important for commercial hedgers, speculators and financial institutions.”

However, not all returning institutions will bring back a staff of the same size.

“The structural changes being made by the exchange have precipitated a need for us to adjust our staffing levels,” explained StoneX’s Kevin Tuohy.