The London Metal Exchange expects to make its first foray into the lucrative mainland Chinese market in the next year or so as the stocks through train pries open the world's biggest commodities market, its chief executive said.
The recently launched Shanghai-Hong Kong Stock Connect, allowing mainland mutual funds to buy Hong Kong stocks, was a "pivotal" moment in opening up the mainland to the West, Garry Jones said on the sidelines of the CRU Copper conference.
The scheme was expected to expand to commodities, mainly metals, once equity derivatives were up and running, Jones said.
That was likely still at least a year away, he said, but the LME, the world's biggest and oldest metals exchange, had other options for making its first steps into the mainland, part of a medium-term strategy.
It could offer order routing, cross-licensing contracts or physical market services such as the exchange's electronic LMESword system that proves the origin and title to LME-warranted metal, he said.
In the wake of a storage scandal in Qingdao port last year, banks and merchants have had to find new ways to keep track of the millions of tonnes of metal they are financing on behalf of customers outside of the exchange.