(Bloomberg) — The head of the London Metal Exchange is hopeful brokers will be able to adapt to a new part-electronic pricing system when they return to the open-outcry trading floor.
The LME last week reversed course on a proposal to close its trading floor and said it will reopen in September, in a victory for floor traders and physical users who’ve been lobbying hard to save it. But the iconic Ring trading floor will only be used to set so-called official prices — which are widely used in the physical industry and are established around lunchtime — while evening closing prices will be set electronically. That potentially deprives Ring dealers of an important revenue stream.
“What we have to deliver is a solution that works for them,” Chief Executive Officer Matthew Chamberlain said on Bloomberg TV. “There is going to have to be some adaptation, but I really hope this offers our category 1 members, our ring-dealing members, an economic model that works for them.”
Investors have been “quite excited” that the LME will keep using an electronic system for its closing prices, while physical users have told the bourse they’re grateful that the Ring will be reopening in September, Chamberlain said.
The LME suspended trading in the Ring as the U.K. went into lockdown in March 2020, and switched to an electronic system to establish daily benchmark prices.
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