The London Metal Exchange (LME) has reopened talks with Chinese authorities to expand its warehouse network to the world's largest consumer of base metals.
The British bourse is hopeful of setting up an efficient arbitrage system with the Shanghai Futures Exchange, which plans to extend the reach of its contracts into the global market.
LME, which handles more than 80 per cent of industrial metals futures worldwide, is optimistic about establishing delivery points in China because the mainland regulator is now showing a 'much more open attitude' towards market liberalisations, said Liz Milan, managing director for LME Asia.
'This time we will make sure that the reasons for having a warehouse in China are much clearer,' she said. 'We get the feeling that this time there is a much more open attitude to discuss the benefits.'
LME attempted to set up warehouses in Shanghai several years ago but the plan was cancelled in 2008 when the Chinese securities regulator made it clear that foreign exchanges' delivery points would not be allowed in the country.
The London exchange is now more bullish about its prospects after Guo Shuqing took the helm of the China Securities Regulatory Commission (CSRC) in late October last year, backing drastic liberalisation of the futures market to bolster the national economy.