LME to increase transaction fees as it eyes Asia expansion
The commodities exchange is planning to raise its fees by 34pc next year as parent HKEx supports its growth into mainland China and Asia
London Metal Exchange will increase its average transaction fees by 34 per cent in January as its first step to turn itself into a profit-making company, a move that analysts believe would benefit its parent Hong Kong Exchanges and Clearing.
Charles Li Xiaojia, chief executive of the HKEx, said the LME fee rise looks "huge" but that it will remain competitive in the market.
The fee increase will take effect right after the expiry date of an agreement made when the HKEx bought the LME in December 2012 and promised no changes to LME's fee or its financial model until January 1, 2015.
"The fee rise will be the first after the HKEx acquisition of the LME and we will stay there. But this would not likely be the last one. The fee rise will mark the commercialisation process of the LME as it is turning into a profit-making company instead of the current system where it is purely a member-owned exchange providing a service for the members," Li said yesterday.
"My target is to make a lot of money. Hopefully, we can make sure the members of the LME benefit a lot in that process so that when our members can make more money, they do not mind [that] we are making a lot of money," he said.
Credit Suisse analyst Arjan van Veen said the LME fee rise would benefit HKEx. "LME trading fees roughly contribute about 15 per cent of HKEx revenues so it is fairly material," he said.