September 19, 2018 / 3:25 PM / a month ago

EXCLUSIVE-Chinese broker Nanhua plans to start trading on London Metal Exchange

LONDON, Sept 19 (Reuters) - Major Chinese broker Nanhua Futures is planning to start trading on the London Metal Exchange in the first half of next year, the head of its British-based operation told Reuters.

Nanhua’s UK unit is in the process of applying for LME Category 2 membership and obtaining clearance from Britain’s Financial Conduct Authority, according to Nong Yan, chief executive of Nanhua Financial (UK) Co Ltd.

Privately held Nanhua, one of the biggest futures brokers in China, would be the first Chinese group to join the LME as a clearing member since 2016, when CCB International, a subsidiary of China Construction Bank , acquired a 75 percent stake in LME member Metdist Trading Ltd.

Nanhua Futures, with assets of more than 15 billion yuan ($2.2 billion), according to its website, has already expanded into the United States and Singapore.

Chinese institutions, including some of China’s biggest banks, raced to set up LME operations after the $2.2 billion takeover of the exchange by Hong Kong Exchanges & Clearing Ltd in 2012.

The 141-year-old LME has been attracting renewed interest from institutions in China, the world’s biggest metals consumer, with conglomerate Fosun International in talks to buy LME broker Marex Spectron, sources said last week.

Two Chinese-owned firms - GF Financial Markets and CCBI Metdist - are among the nine top-tier Category 1 LME members, allowing full trading, including on the open-outcry floor.

If Fosun acquires Marex, one third of the LME’s ring-dealing members would be Chinese-owned.

Category 2 members are able to trade on the LME’s electronic platforms and the telephone market but not in the ring. (Reporting by Eric Onstad Editing by Veronica Brown, Catherine Evans and Giles Elgood)

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