New LME chief looks beyond metals

'Watch this space' says agriculture commodities veteran as exchange eyes mainland demand

PUBLISHED : Tuesday, 27 August, 2013, 2:02pm
UPDATED : Wednesday, 28 August, 2013, 3:32am

London Metal Exchange's newly appointed chief executive Garry Jones said he would focus on expansion in the mainland and would launch new products beyond metal futures trading.

The London-based bourse and its parent Hong Kong Exchanges and Clearing yesterday named Jones, former chief executive of US commodities exchange NYSE Liffe, to succeed Martin Abbott who resigned in June. He will join the exchange on September 30.

Jones said in a telephone conference from London that he would launch new products in addition to the many metal futures products traded on the LME.

Brokers believed the world's largest base metal exchange may introduce agriculture commodities and currencies products to meet demand from mainland China. Jones has 30 years of experience in soft and agricultural commodities trading.

Jones said the LME is going to launch its own clearing house soon.

"With the new technology, it would be easy for the LME to introduce new products. Base metal contracts are currently the core products of the LME but we can move beyond metals to consider introducing agricultural commodities which also require physical delivery," Jones said. "Watch this space."

Jones, who will also become co-head of global markets at HKEx, is seen as an outsider but HKEx chief executive Charles Li Xiaojia said Jones' experience in agriculture commodities, fixed income and currencies products and clearing services would be relevant to HKEx's strategy to develop into an overall commodities exchange.

HKEx seeks to diversify into commodities trading as the bourse struggles with declines in listings and stock market turnover.

Among Jones' first challenges may be a management shake-up. In his appointment announcement, the HKEx said Diarmuid O'Hegarty, LME deputy chief executive - who was said to be a candidate for the job - had resigned and will leave after his six months notice period. Market speculation had named Martin Pratt, chief operating officer at metal futures broker Triland Metals, as a potential candidate.

Jones will also need to handle the several class action lawsuits faced by the LME for alleged "anti-competitive behaviour" in aluminium warehousing. However, Li reiterated the suits were groundless and that the LME would defend itself vigorously.

He will also need to seek ways for the LME to expand into the mainland market - the world's largest metal consumer.

Before heading NYSE Liffe, Jones was chief executive of Brokertec Europe and ICAP Electronic Broking after working in British and US investment banks such as Daiwa Securities, Banque Paribas and Merrill Lynch.