After a 144-year run, the London Metal Exchange (LME) open outcry trading ring looks set to permanently shut after a Covid-19-inspired temporary closure demonstrated the benefits of electronic pricing.
In a discussion paper, the exchange says it believes it is the right time to consider the permanent closure of the Ring and a move to an electronic pricing structure.
The Ring - the last open outcry trading venue in Europe - has been closed since the first UK Covid-19 lockdown in March when the LME switched to an electronic system for establishing pricing for metals such as copper, zinc and aluminium.
Matthew Chamberlain, CEO, LME, says: "We have been clear that we will not use the pandemic as a pretext to close the Ring, and we remain committed to this; however, it is fair to observe that this period of electronic pricing has served the market well, with consistently high volumes of activity in the pricing window, easily observable by all stakeholders, and more participants with direct access."
The LME, which is owned by Hong Kong Exchanges and Clearing, has seen competition from the likes of CME Group and the Shanghai Futures Exchange increase in recent years.
Says Chamberlain: "Given the data, and our industry’s continued move towards digitisation and greater transparency, we believe it is now time to consider the long-term future of pricing at the LME - with the intention of providing certainty, which will allow all customers to make their future business decisions with confidence.”