The London Metal Exchange has offered the job of chief executive to Martin Pratt, two sources said, picking a veteran broker to lead the bourse through the most tumultuous period in its 136-year history.
Pratt, now chief operating officer at Triland Metals, a non-ferrous metals futures broker owned by Japan's Mitsubishi, was chosen over the Hong Kong-owned exchange's own chief operating officer Diarmuid O'Hegarty and Garry Jones, a former chief executive of NYSE Liffe, the sources said on Tuesday.
In Pratt, the LME - bought by Hong Kong Exchanges and Clearing last year - is tapping an experienced metals trader. He has both the knowledge of its complex trading structure and sufficient distance from the crisis over warehousing that has engulfed the exchange. He would replace outgoing chief Martin Abbott, who announced plans to leave in June.
The LME declined to comment.
Picking a market insider over an exchange industry executive may reflect the unique challenges ahead for the new chief executive, arguably the most important job in global metals trading.
Pratt has spent his career trading commodities and working for LME ring dealers, firms that can trade in the exchange's open-outcry trading floor known as the ring. Before joining Triland in 2007, he worked for brokers Natixis and Sucden. While Triland is one of the LME's 11 ring-dealing members, it does not own any of the warehouses at the centre of a controversy over the rules governing metal storage going back to 2009.
The exchange has been damaged by prolonged and scathing criticism over its handling of its warehousing policy, which some consumers say has contributed to record high physical price premiums for aluminium and long wait times to take delivery.
Alongside Goldman Sachs and other banks and traders that now own many of the world's biggest warehousing companies, the LME is facing several class action lawsuits alleging "anti-competitive behaviour" in aluminium warehousing.
HKEx said the suits were without merit and the LME would contest it vigorously.
It was not clear if Pratt will accept the job. "Nothing's been confirmed," one of the sources said.
Restoring confidence among industrial users will be one of the biggest challenges for Abbott's successor.