The London Metal Exchange said Tuesday that BOCI Global Commodities (UK) Ltd., a unit of Hong Kong-incorporated BOC International Holdings Ltd., an investment banking subsidiary of Bank of China Ltd., has been approved for category two associate broker clearing membership and will become the first Chinese member of the exchange.
Associate broker clearing members have all privileges of category one ring dealing members and operate through the 24 hour inter-office market but are not allowed to trade in the ring. BOCI Global incorporated in the United Kingdom last year and applied for LME membership last year.
The company had previously been admitted as a clearing member of LCH.Clearnet and received regulatory clearance from Britain’s Financial Services Authority. It will need to purchase 25,000 B shares in the LME to activate the membership.
The approval follows reports earlier this month that the LME is surveying members on whether to add settlement in China’s renminbi currency to euro and yen clearing, while dropping sterling clearing. LME base metals contracts are denominated in dollars but the alternative currency settlements and clearance are offered as an option.
Sources also recently told Dow Jones Newswires that the LME may also be nearing completion of approvals for a network of metal warehouses in China, which accounts for more than 40% of global demand for the base metals traded on the exchange.
The LME opened its first Asian office in Singapore in 2010 and last year launched several contracts trading with the Singapore Exchange in what was described as an effort to give Asian investors to metals prices.
LME officials also said the exchange board had approved associate broker clearing membership for G.H. Financials Ltd. and the resignation of Phibro Ltd. from associate broker clearing membership. The approvals bring the total number of associate broker clearing members on the exchange to 27 while 12 companies are listed as ring dealing members.
Phil Burgert is managing editor of ResourceInvestor.com. He can be contacted at firstname.lastname@example.org