Victory for traders as London Metal Exchange to reopen outcry ring

·2 min read
Traders during an open outcry trading session in 'The Ring' at the London Metal Exchange in London. Photo: Matt Crossick/ EMPICS PA
Traders during an open outcry trading session in 'The Ring' at the London Metal Exchange in London. Photo: Matt Crossick/ EMPICS PA

The London Metal Exchange (LME) in London has confirmed plans to reopen its iconic outcry trading ring on 6 September, a win for those that had pushed back against proposals to close it. 

The LME "ring" has been open for 144 years and is a staple of the traditional metals market in the UK. It hosts the spectacle of face-to-face trade, with its distinctive language of hand signals to buy, sell and set prices.

Its closure would have seen a permanent move to computerised trading. 

The LME shut in March 2020 due to COVID-19 social distancing protocols, meaning trade had moved online, via electronic platforms or over the phone. 

Read more: European markets hold firm amid concerns over 21 June reopening

The LME also said in a release that in the future closing prices will be determined electronically, "enhancing participation and transparency, supporting financial customers and larger physical users."

It also said its electronic liquidity enhancement plans would be optimised and commence in 2022.

Traders during an open outcry trading session in 'The Ring' at the London Metal Exchange in London. Photo: Matt Crossick/EMPICS PA
Traders during an open outcry trading session in 'The Ring' at the London Metal Exchange in London. Photo: Matt Crossick/EMPICS PA

The announcement comes following responses to a discussion paper on the future of the trade and market structure. The market received a record 192 responses. 

“The divergent views in response to the Discussion Paper were particularly apparent between traditional participants and some smaller physical clients on the one hand, and our larger merchant trader and financial participants on the other," said Matthew Chamberlain, LME CEO. 

"However, respondents were constructive in proposing approaches to reconcile these differences, respecting the differing needs of the LME community, and preserving the unique and mutually beneficial blend of physical and financial market liquidity, which makes our market so special.”

When the closure of the trading floor was proposed, there was outcry as critics felt the end of face-to-face trade would strip the market of its ability to offer prices of metals in an efficient way. 

Traders in 'The Ring' at the London Metal Exchange in London. Photo: Matt Crossick/EMPICS PA
Traders in 'The Ring' at the London Metal Exchange in London. Photo: Matt Crossick/EMPICS PA

It currently offers prices as far forward as 10 years into the future and is a service relied upon by miners and carmakers, among other professions. 

Prominent backers of the the ring include politician and former trader Nigel Farage, who said earlier this year he was "very, very sad" about the mooted plans to close the floor. 

Farage noted that it was one of the things that had made him eurosceptic, as it represented a "truly global marketplace".  

Watch: LME bans day drinking for traders 

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