April 24, 2014 / 3:16 AM / 4 years ago

CORRECTED-UPDATE 2-LME says up to quarter of its electronic trade comes from Asia

(Corrects paragraph 2 to show this is not the first time the LME has released data on Asian electronic trading)

* Bourse looking to expand in China, rest of Asia

* CEO also says no plans for yuan-listed products in London

* Will decide on future of open outcry trade later in year

By Melanie Burton and Polly Yam

HONG KONG, April 24 (Reuters) - Up to a quarter of electronic trading volume on the London Metal Exchange (LME) comes from customers in Asia, its chief executive said, indicating the bourse has a roboust base for its drive into the region.

The data shows that the LME, the world’s biggest marketplace for industrial metals such as copper and aluminium, has a toehold in the Asian market, but it also still has huge room to grow.

“Ten-25 percent on any given day of outright trading on the electronic system comes from Asia,” LME Chief Executive Garry Jones said at a conference in Hong Kong, adding that overall electronic trade volumes grew 28 percent last year.

The comments come as the LME is looking to boost business in top metals consumer China, as well as countries such as Indonesia, Singapore and South Korea, after being bought by Hong Kong Exchanges & Clearing Ltd in 2012.

As part of that push, Jones said the LME plans to increase its membership.

“We will be adding new membership in London,” he said on Thursday. “We will also add membership into our HK platform ... because we will be launching commodity products in Hong Kong.”

HKEx announced this week that it would launch renminbi-denominated mini-futures contracts for copper, aluminium and zinc, as well as a thermal coal contract.

If successful, the new products could also rival the Shanghai Futures Exchange (ShFE), which sets the reference price for physical and futures metals trading in China.

The ShFE on Thursday said it planned to launch a base metals contract as part of steps to internationalise its business.


Jones played down the impact of Barclays’ decision this week to quit most of its commodities trading businesses, part of a broader retreat by banks as profits tumble in the face of tougher regulation.

“There is a trend of eastern capital replacing western capital, reflecting the realities of the world economy,” he said.

“We are always concerned when people leave the market, but that is their business decision. There are plenty of other people willing to do that business.”

He also said the exchange was assessing its fee structure ahead of the September launch of its new clearing house and would make a decision on pricing soon.

After the start of LME Clear, the exchange will accept yuan-denominated collateral for its London-listed products, although it has no plans to introduce yuan listed products in London.


The LME added Kaohsiung in Taiwan as a delivery point for base metals last year, but the holy grail for the bourse is to open metal warehousing facilities in China.

It has sought for many years to set up delivery networks in the country, but Chinese authorities currently forbid foreign exchanges from opening depots.

“Whether we are allowed to licence (warehouses) in China will depend on demand from Chinese users,” he said, although he did not expect the rules to change in the near term.

He also said that a decision on the future of the LME’s open outcry floor, the last of its kind in Europe, would be made this year. (Writing by Fayen Wong; Editing by Joseph Radford and David Evans)

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