Metals prices more than tripled in the past decade as demand from emerging markets overwhelmed supplies from mines. The LME handled a record $15.4 trillion of contracts last year. The 135-years old exchange sets global prices for metals from copper to aluminum to nickel.
Hong Kong Exchanges, which lost its place as the world’s biggest exchange operator by market value to CME Group, is seeking to broaden its business as the pipeline of large initial public offerings from China slows and equity volumes fall. The bourse agreed to maintain the LME’s contract structure and open- outcry trading, conducted at the bourse on Leadenhall Street in London’s financial district.
The Asian exchange also will keep the existing warehousing network, help the LME develop its own clearinghouse and hold trading fees until at least the start of 2015. It will seek to bring “a lot more volume” to the LME and may help the LME to set up warehouses in China, reduce trading restrictions in China, or even expand operations to Asian hours and clearing contracts in yuan, Charles Li, Hong Kong Exchanges chief executive officer, said Oct. 15.
As a second stage, Hong Kong Exchanges may expand the LME into trading iron ore, freight, coking coal and even agricultural products, including rubber, as part of the next stage of growth after the acquisition, Li said.
Chris Hamilton, a spokesman for the FSA, confirmed the FSA has approved change in control of the LME.