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Reuters

The London Metal Exchange hopes its links to Asia and expertise in physical metals will help it win the right to manage the century-old London gold pricing benchmark, chief executive Garry Jones said.
The 137-year-old exchange was also upbeat that mainland regulators would allow it to extend its global base metals warehouse network there, perhaps next year, Jones said, in what would be a key element in its strategy to capture more business from the world's biggest metals consumer.
The LME, owned by Hong Kong Exchanges and Clearing, has enjoyed a string of recent successes, including winning the right last week to take charge of London's platinum and palladium pricing benchmarks from December.
The LME is one of five companies shortlisted to replace the gold "fix" benchmark with a new electronic system.
A lot of the same people who traded physical industrial metals such as copper on the LME also bought and sold precious metals, Jones said.
"We feel there's a lot of support from the LME to play a bigger role in precious metals because of those physical players," he said.
The LME's new pricing process would be run through bespoke platform LMEbullion, an electronic version of the current round-by-round fixing process.
"We've duplicated the kind of system they do verbally and created an electronic system which is exactly what they want," Jones said. "Some of the work could be applied to the gold market if we're successful with that."
Now that the LME has an Asian owner, it is also touting its links to gold market participants.
"One nuance of our approach is: yes it is the London gold price, but we think we can give access to that to Asia quite easily - that's a big tick for us," Jones said. "From that perspective it's one of our strongest points.
"We have to gain legitimacy in the gold market and winning platinum will help us to do that. But we're under no illusions, it doesn't buy us any special favours - we have to go out and win this separately on its own merit."
In the LME's core base metals franchise, Jones said he was positive about the central government allowing the opening of LME-approved storage facilities on the mainland. With the LME's focus on physical metals, having delivery and storage depots in the world's biggest metals consumer would be a big boost to its expansion plans.
Past efforts to get approval for LME warehouses on the mainland had been blocked, but recently there had been a new, but gradual, move towards more cooperation, Jones said.


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LME plays Asia card in bid for gold pricing job

Garry Jones said he was positive about the central government allowing the opening of LME-approved storage facilities on the mainland. Photo: Bloomberg

Garry Jones said he was positive about the central government allowing the opening of LME-approved storage facilities on the mainland.

Business

Commodities

Exchange hopes expertise in metals will help it win right to replace bullion market benchmark


The London Metal Exchange hopes its links to Asia and expertise in physical metals will help it win the right to manage the century-old London gold pricing benchmark, chief executive Garry Jones said.
