LME will return to ring trading next month, but with changes – Aluminum Insider
The majority of members of the London Metal Exchange (LME) plan to return to the trading room when it reopens next month, but some say the volume could be smaller due to the new hybrid system to be put in place.
The LME trading floor was closed for the first time since World War II last March due to the coronavirus and associated closures. After consultation with LME stakeholders, the sales organization decided to reopen on September 6. However, the reopened LME trading floor will not be the same.
From now on, the prices of LME contracts will be established between 12:30 p.m. and 1:15 p.m. But the closing prices will live on LME’s LMEselect system, causing volume to drop for some members. In addition, the auction floor will close if the number of ring members is less than six or if the volumes fall below a certain level.
Currently, Amalgamated Metal Trading, ED&F Man Capital Markets, GF Financial Markets (UK), Marex Financial, StoneX Financial, Sucden Financial, Société Générale International and CCBI Global Markets (UK) plan to return to the trading room on September 6.
Triland Metals announced earlier this month that it will not be returning to the LME floor.
“We’re going to get back in the ring, see how the volumes go,” an anonymous source from one of LME’s ground trading members told Reuters Last week.
“We are fully committed to returning to the ring when it reopens with full staff,” said Fred Demler, Global Head of Metals at ED & F Man Capital Markets.
“Ring trading is difficult, if not impossible, to replicate on a platform. It provides the liquidity that enables efficient and reliable pricing, which is of critical importance to commercial hedges, speculators and financial institutions.
However, not all returning institutions will bring back staff of the same size.
“The structural changes brought about by the exchange forced us to adjust our staffing levels,” explained Kevin Tuohy of StoneX.