London Metal Exchange plans to close trading ring after 144 years

The London Metal Exchange Ltd. outlined plans to permanently close its open-outcry trading ring, which ran for 144 years before it was suspended in March 2020 due to the COVID-19 pandemic.

The LME said Jan. 19 that it is proposing to move to an electronic pricing structure to increase direct participation during price discovery periods and to increase transparency. The price discovery process is used to determine spot prices.

The LME invited feedback on its proposals until March 19 and said it plans to provide an update before the end of the second quarter.

"Given the data, and our industry's continued move towards digitization and greater transparency, we believe it is now time to consider the long-term future of pricing at the LME," CEO Matthew Chamberlain said in the statement.

The planned ring closure was among various modernization efforts the LME outlined in its latest discussion paper. The exchange also plans to boost the liquidity of its central electronic venue through incentives, move to a realized variation margin methodology to increase efficiency, and possibly introduce additional disclosures and policies to "strengthen market conduct."

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