LME has no current plans to cease open-outcry floor trading: CEO
London (Platts)--25Nov2013/727 am EST/1227 GMT
The London Metal Exchange currently has no plans to cease open-outcry floor trading, LME CEO Garry Jones told Platts Monday.
He said there are no plans to close the ring, and a consultation would be started in 2014 on the future of the open-outcry system.
"It's not even been discussed yet, it's not on the agenda," said Jones, adding that people had been putting "two and two together and getting five."
LME owner Hong Kong Exchanges and Clearing appointed Jones as CEO September 30, replacing Martin Abbott whose resignation was announced in June.
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Jones has over 30 years of experience in exchanges and financial services and was most recently CEO of NYSE LIFFE -- a global exchange offering a range of fixed income, currency and commodities derivative products -- and group executive vice president and head of global derivatives for NYSE Euronext.
At the LME dinner in October Jones said: "When LIFFE lost the Bund contract to Eurex it was all about electronic trading. The closing of many of the pits at the CME really revolutionized that market. And ICE's success is largely based on going into markets and changing the way they operate."
This was taken by brokers and traders as perhaps meaning that floor trade could be closed. "He's clearly laid his stall out," said one LME broker.
Jones said the ring is "all about price-setting" and it is unfair to make comparisons between volumes of electronic trading and floor trading.
Ring trade currently accounts for around 5% of LME volume.
Jones said this has been pretty much stable for the past 5-years.
When HKEx purchased the LME it said no changes would be made until 2015 at the earliest.
Jones pointed out Monday that LME ring trade is different to other forms of open-outcry as it is not continuous.
"Each LME metal is traded in highly liquid five-minute ring sessions which are themselves representative of global supply and demand," the LME website said.
"The ring is a special case. It is not all day, it is a specific price-setting mechanism," said Jones, who has just returned from a conference in China.
Asked if the LME had made any progress on the possibility of having exchange-registered warehouses in China, Jones said that although the LME would like to licence warehouses in the country it was not currently possible.
"We would like to have warehouse owners coming to us to ask to open LME-registered warehouses, but the rules don't allow it," he said, adding that the LME is discussing with Chinese authorities on the matter.
"It makes sense [to have LME-registered warehouses in China]," he said.
HKEx agreed its GBP1.388 billion ($2.16 billion at the then-prevailing exchange rate) purchase of the LME in June 2012 and completed the deal last December.
--Ben Kilbey, email@example.com
--Edited by Jeremy Lovell, firstname.lastname@example.org