LME to test electronic close on other metals if nickel trial succeeds

LONDON (Reuters) - The London Metal Exchange (LME) plans to extend a trial of using electronic closing prices rather than open outcry for nickel to other metals, its chief executive told the Reuters Global Commodities Summit in London.

The offices where the London Metal Exchange is headquartered are seen in the City of London, Britain, January 18, 2018 REUTERS/Peter Nicholls

The LME will begin a three-month trial with the benchmark three-month nickel contract in February and will introduce it for other metals such as aluminum and copper if the program is successful, Matt Chamberlain said.

“It’s highly unlikely that if it was successful for nickel then we would only keep it for nickel. We either do it for non-ferrous or do it at least for all the liquid metal such as nickel, aluminum, copper,” he said.

The LME, the world’s oldest and largest market for industrial metals like copper and aluminum, has lost market share in recent years to competitors the U.S. CME Group Inc and China’s Shanghai Futures Exchange (ShFE).

The CME has released a stream of new contracts, while the LME has taken more time to come up with a smaller group of new products.

The LME, owned by Hong Kong Exchanges and Clearing Ltd., has developed new technology that makes launching these new contracts easier, faster and less expensive.

Chamberlain said the LME did not have a specific list of criteria about what would constitute a successful trial in nickel as it was unclear how the market would react.

He did not rule out the possibility of electronic closing in spreads and said the exchange would consult with members on the trial’s outcomes.

“We have been very clear that it shouldn’t be seen as a slippery slope,” Chamberlain said, adding that there would be a clear roadmap provided.

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Reporting by Zandi Shabalala. Editing by Jane Merriman