We need to talk about the London Metal Exchange (now)
Volumes are down, executives are leaving, and the LME still has archaic trading structures linked to sailing times at the turn of the 19th century
London — It’s time to talk about the London Metal Exchange (LME). The venerable institution that sets the global reference price for metals, such as aluminium and copper, seems to be lurching from crisis to crisis. Volumes are down; they fell 4% in 2015 and another 8% last year, the first time since the turn of the century activity has contracted over two consecutive years. Discontent is up, particularly among the core broker community, which has bridled at higher trading fees and lambasted the exchange’s wooing of financial players. The LME’s chief operating officer Stuart Sloan left in December. One month later came the resignation of its CEO Garry Jones. To lose one senior office is unfortunate, to lose two in such quick succession suggests deeper tensions with the LME’s owner, Hong Kong Exchanges and Clearing (HKEx), which has been trying to monetise its enormous $2.2bn investment in the London exchange. Rivals are lurking in the wings: CME Group, which has historically only com...
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