The London Metal Exchange (LME), the world’s oldest and biggest marketplace for industrial metals, announced on Tuesday (June 8) that its ring trading will reopen on September 6 with official prices of metals to be decided there, as they have been for generations.
The iconic open outcry trading floor, with its distinctive red leather circular sofa, the last such venue in Europe, was closed in March 2020 for the first time since World War II, as the U.K. went into lockdown.
In January 2021, the LME launched a consultation process on permanently closing its open-outcry trading floor, arguing digital trading was the future. However, the move was met with heavy resistance from an influential group of brokers and traders who argued that the closing of the floor has hurt trading volumes and made pricing less robust.
LME users speaking to The Evening Standard had told of their outrage at the proposals, with many claiming the market was using the cover of coronavirus as an excuse to close open outcry trading.
The decision to reopen the trading ring where traders have been shouting orders to buy, sell and set prices face-to-face for 144 years -represents a lifeline for one of London’s oldest financial institutions, where around $50 billion of metal trades are made on every day.
LME Chairman Gay Huey Evans commented on the decision: “The Board believes that the pathway laid out fully respects the interests of the physical participants who sit at the heart of our ecosystem and achieves the right balance between fairness, choice, efficiency, and progression.”
According to LME, this date was chosen to “provide certainty and allow forward planning,” adding that that some measures, like social distancing, may still be in place.
Additionally, official prices widely used in physical metal contracts would be determined in the ring in order to “support physical customers who use these prices in their contracts,” but closing prices used to assess the value of financial portfolios will be decided electronically. The LME also said it would stick for now with its existing method for calculating margin payments.
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Chicago-based CME Group said it wouldn’t reopen most of its trading pits in the “Windy City” after temporarily closing them in March 2020.