Chinese firms a ‘growing force’ for London Metal Exchange

The London Metal Exchange has invested over £1 million (HK$9.58 million) in technology to upgrade its famous open outcry trading floor, as a growing number of Chinese members boosts the bourse’s future prospects.

Peter Childs, head of trading operations and price discovery at LME, said six Chinese companies had joined since the LME was purchased by Hong Kong Exchanges and Clearing in 2012.

“The new trend in recent years has been Chinese banks and brokers joining as members,” Childs told the South China Morning Post in an interview at the London Metal Exchange.

“The acquisition has allowed the LME to have a footprint in Asia while the HKEX now has a footprint in commodities trading. We have seen more Chinese investors and banks interested to trade and to become members of the LME since the HKEX acquisition.

“Chinese firms are an important growing force for the LME and we believe there may be more Chinese companies interested in becoming members in the future.”

He said two of the Chinese companies - GF Financial Markets UK and CCBI Metdist Global Commodities - are Category 1 members, meaning they can trade in the Ring, as well as by telephone and electronically. They are among nine members who use open outcry to trade on the LME’s famous Ring trading floor.

The other Chinese members - OCI Global Commodities UK, China Merchants Securities UK,    ICBC Standard Bank, ASB Group Asia Investment, and Lee Kee Group - are not permitted to trade in the Ring, but are entitled to buy and sell by telephone or using the electronic trading system.

Childs said although a majority of trade was now done by telephone or electronic trading systems, the LME has nonetheless spent £1 million on technology to enhance the new Ring trading hall located at Finsbury Square, which came into use in February this year.