London Metals Exchange to invest £1m in new trading floor technology

By Graeme Burton
23 Jun 2014 View Comments

The London Metal Exchange (LME) is planning to invest £1m in new trading floor technology as part of a series of investments intended to modernise the Exchange.

The LME plans to make the investments in the Ring, the Exchange's "open-outcry trading floor", a decision made following a six-month internal review and discussions with market participants.

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The LME describes the Ring as a "robust price formation venue that provides a transparent price-discovery process and supports a unique daily prompt structure". It has serviced the global metals industry for 137 years, and is Europe's only remaining open-outcry trading venue - similar to the London Stock Exchange floor of popular culture, until it was overtaken by technology.

"The LME will continue to host the Ring, with its robust and transparent price-discovery process, for as long as the market needs it," said LME CEO Garry Jones, who is also co-head of global markets at Hong Kong Exchanges and Clearing (HKEx).

He continued: "Our review has highlighted areas where we can enhance the Ring and increase its efficiency alongside the LME's other trading venues. We will be particularly focused on further aligning it with our electronic trading venue, LMEselect, and on ensuring that it continues to meet global standards for transparency, integrity and governance."

In 2014, the LME will invest £1m in new technology for the Ring, with new wall boards on the trading floor with enhanced technology to help integrate Ring and LMEselect pricing, and to facilitate business conducted in the Ring.

"While we value the Ring's long and distinguished history, we are conscious that we need to continue to keep it relevant for the global market and able to serve its needs. We will work with users to further enhance Ring-based trading to keep pace with the rapidly changing marketplace and generate more volume," said Jones.

Since 2010, the LME has introduced more than 20 new rules to ensure that the price discovery process remains as efficient as possible, while serving members and their clients. In 2013, the LME doubled seating capacity for Ring-dealing members to cater for floor teams, which have expanded to meet the needs of clients who increasingly wish to be serviced from the Ring.

The review of the Ring took place as the LME looks to leverage business opportunities following its acquisition by HKEx in December 2012. More than 25 stakeholders participated in the review, including all 11 Ring-dealing members and several industry trade bodies.

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