The London Metal Exchange is set to propose permanently shutting its Ring, where metals have been traded since its founding in 1877, a move that would mark the end of in-person trading of commodities in Europe.
The exchange’s decision, which a person familiar with the matter said would be formally announced later on Tuesday, comes after it temporarily halted trading in the Ring last year because of the pandemic.
If the LME’s members agree to its closure, it would mark the end of an era for the Hong Kong Exchanges and Clearing-owned exchange. The red sofa Ring is the last open-outcry trading venue in Europe and began when metals merchants would draw a circle on the sawdust floor of a City of London coffee house in the 19th century.
Tuesday’s move by the LME is also a belated acceptance of the dominance of electronic trading that has led to many futures exchanges shutting their trading floors over the past decade. The New York Mercantile Exchange’s last traders departed in 2016.
The LME’s Ring is known for its sharp-suited men and its strict rules on dress code and conduct, a breach of which could lead to fines. The prices set by the Ring are used as the official LME daily price, which is key to buyers and sellers across the globe.
The LME is unique among exchanges in allowing its users to hedge metals prices for specific days into the future, rather than in standard three-month increments as at most futures exchanges. It was previously argued that human traders on the Ring were best placed to execute these complicated trades.
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2021-01-19 11:13:00Z
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