London Metal Exchange U-turns on closing iconic trading ring

The London Metal Exchange’s iconic trading Ring is set to reopen on 6 September, reversing an earlier plan to close the 144-year-old venue.

Before the outbreak of Covid-19, the metals industry’s key price-maker was well-known for the close proximity its traders kept to each other, yelling and gesticulating orders across the trading floor.

Having been forced to close last March after a trader tested positive for the coronavirus, plans were mooted for the physical venue to close entirely in favour of a transition to digital dealing.

Despite the Ring’s chief executive Matthew Chamberlain saying that electronic pricing had “served the market well” during the lockdown, the LME launched a consultation raising the prospect of shutting the floor, a decision that would have seen the exchange follow many of its open outcry peers, such as The London International Financial Futures and Options Exchange and The International Petroleum Exchange, into the digital age.

READLondon Metals Exchange weighs permanently closing 144-year-old trading pit

The exchange will now reopen in three months’ time, but closing price discovery and trading will be moved to its electronic platform, “enhancing participation and transparency”, according to an 8 June statement.

Official prices will still be determined on the Ring, however, to support physical customers who use these prices in their contracts.

“The pathway laid out fully respects the interests of the physical participants who sit at the heart of our ecosystem and achieves the right balance between fairness, choice, efficiency, and progression,” LME chairman Gay Huey Evans said.

READ What’s next for the London Metal Exchange Ring?

A number of respondents to the LME’s consultation noted that the move to electronic pricing could have an impact on liquidity levels at the exchange, so plans are also in train to review a variety of contracts to see where electronic liquidity could be best supported.

While the pandemic put a pause on the animated in-person trading of the Ring, known for its plush leather couches as much as its position as the world’s leading industrial metals marketplace, the floor had been under pressure over its boisterous atmosphere before the outbreak of Covid-19.

READLME bans all Ring traders from drinking alcohol during work hours

In 2019, the LME introduced its first code of conduct in its 142-year history, on the back of criticism over a client’s decision to host a cocktail party at the Playboy Club London in Mayfair using LME branding, and banned its traders — which used to include Brexit campaigner Nigel Farage —  from office-hours drinking in a bid to improve its culture.

To contact the author of this story with feedback or news, email Justin Cash

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