Membership – getting lonely on floor but others coming on board

The LME moved to new premises earlier this year, cutting the ribbon on its fourth bespoke trading floor. But with ring-dealing member (RDM) numbers unchanged at nine from this time last year, the new mini-sized ring represents something of a downsize.

RDM numbers fell to single figures after heavyweight JP Morgan (JPM) gave up its floor trading status in 2015. Over the past decade, nearly all the front-ranking companies joining the LME have opted to become associate broker clearer members (ABCMs), which make up the second tier of LME membership.

ABCMs have all the rights and privileges of LME membership but cannot trade during the open-outcry trading sessions. Over the last year, their numbers have dropped by one to 32.

The most noteworthy addition to LME members came in June when Jump Trading Futures LLC became a category three member – the Chicago-based high-frequency trading (HFT) firm is part of a growing number of algorithmic traders that now has access to the LMESelect platform.

The following chronology details the key shifts on the LME since the mid-1980s:

AUGUST 2016 – Gerli Metalli SPA becomes category five member

 

JULY 2016 – Jly Metals Pte Ltd becomes category five member

 

JUNE 2016 – GH Financials (Hong Kong) Ltd becomes category four member

 

JUNE 2016 – Jump Trading Futures becomes category three member

 

APRIL 2016 – Fajr Investment Advisory becomes category five member

 

FEBRUARY 2016 – Cargill International SA, Enmetco LLC, Lonconex Ltd, MetAlliance LLP, Nyrstar Budel BV and Rio Tinto (London) Ltd all resign as category five members

 

DECEMBER 2015 – ABans Global Ltd approved as a category five member

 

DECEMBER 2015 – Credit Suisse Securities (Europe) resigns as a category four member

 

DECEMBER 2015 – Jefferies Bache Ltd resigns as an ABCM

 

OCTOBER 2015 – Cargill is approved as an ABCM. It had previously been an associate trade member (ATM), the lowest LME membership category – these firms have no trading rights except as clients

 

OCTOBER 2015 – Berkeley Futures becomes category four member

 

SEPTEMBER 2015 – JPM gives up RDM role and becomes an ABCM. The switch is significant because JPM was once the biggest liquidity provider on the floor and had a long history, dating back through acquisitions to the creation of the LME in the 19th Century

 

SEPTEMBER 2015 – Credit Suisse Securities (Europe) downgrades from ABCM to associate broker member (ABM)

 

AUGUST 2015 – RJ O’Brien becomes an ABCM

 

MAY 2015 – Liberty Commodities becomes an ATM

 

JANUARY 2015 – Traderight gives up ABCM status, downgrades to ABM

 

NOVEMBER 2014 – China Merchant Securities becomes an ABCM

 

JULY 2014 – SocGen says will give up its RDM status and become an ABCM following its purchase of the remainder of Newedge. The floor teams merge in September, with Newedge the sole RDM

 

JANUARY 2014 – GF Financial becomes LME RDM

 

NOVEMBER 2013 – Jefferies Bache relinquishes RDM status, reverts to ABCM

 

AUGUST 2013 – GF Futures Hong Kong buys commodities arm of Natixis for $36 million, becomes ABCM as GF Financial Markets (UK). After BOCI, GF is the second Chinese entity with LME membership

APRIL 2013 – Traderight Ltd approved as an ABCM

 

FEBRUARY 2013 – Credit Agricole resigns as ABCM, Commerzbank joins

 

NOVEMBER 2012 – Barclays Capital, a leading trader for 22 years, exits ring and becomes an ABCM

SEPTEMBER 2012 – Jefferies Bache upgrades to RDM from ABCM

JULY 2012 – Natixis Commodities, a long-standing firm formerly known as Sogemin Metals, exits the floor – its French parent fails to find a buyer for its commodities unit. It becomes an ABCM

JULY 2012 – BOCI Global Commodities (UK) Ltd starts trading and clearing as an ABCM

APRIL 2012 – GH Financials Ltd’s ABCM membership application approved

APRIL 2012 – BOCI’s ABCM membership application is approved by LME board – it is the first Chinese member

APRIL 2012 – Phibro Ltd resigns as an ABCM

DECEMBER 2011 – INTL FCStone upgrades to RDM from ABCM after acquiring the metal operations – but not the LME shares – of MF Global

OCTOBER 2011 – RDM MF Global (UK) Ltd barred from floor after parent firm declared a defaulter

AUGUST 2011 – INTL FCStone upgrades to ABCM from an ATM

MARCH 2011 – INTL FCStone completes formal acquisition of Ambrian Commodities to join LME as an ATM 

MARCH 2011 – Tullett Prebon starts operations as an ABCM

DECEMBER 2010 – Interdealer broker Tullett Prebon (Europe) Ltd approved as an ABCM

OCTOBER 2010 – Standard Chartered starts trading and clearing as an ABCM

OCTOBER 2010 – Australia and New Zealand Banking Group approved as Associate Broker (category four). ABMs issue LME contracts but do not trade during the open-outcry sessions

SEPTEMBER 2010 – Engelhard International resigns as ABCM

JULY 2010 – Scotia Bank Europe and Standard Chartered approved as ABCMs

 

JUNE 2010 – JPM becomes RDM after it completes purchase of the metals business of RBS/Sempra Metals

MARCH 2010 – Darton Commodities, a major trader of cobalt, becomes an ATM 

OCTOBER 2008 – Mizuho Securities USA Inc, a unit of Japan’s Mizuho Bank, joins as an ABCM

SEPTEMBER 2008 – UK steel trader and supplier Total Global Steel Ltd approved as an ATM

MAY 2008 – ICAP approved as an ABCM

MAY 2008 – Bank of Nova Scotia approved as ABM

MAY 2008 – Ambro Ltd approved as an ATM

JANUARY 2008 – ArcelorMittal approved as a Category 3 clearing member

JANUARY 2008 – Ashton Commodities becomes an ATM

SEPTEMBER 2007 – UK-based commodity vehicle Commoditrade says it has enough shares to entitle it to apply for RDM status

SEPTEMBER 2007 – ED&F Man’s application for RDM status accepted

JULY 2007 – UBS Clearing and Execution Services Ltd, formerly known as ABN Amro Futures Ltd, ceases to be a Category 2 member. UBS Ltd remains an ABCM

JULY 2007 – UK bank Royal Bank of Scotland (RBS) and US-located Sempra Energy create a commodities joint venture called RBS Sempra Commodities LLP. One of its subsidiaries is RDM Sempra Metals Ltd (SML)

JUNE 2007 – ArcelorMittal, the world’s largest steelmaker, applies to become a Category 3 clearing member

OCTOBER 2006 – ABN AMRO Futures Ltd changes its name to UBS Clearing and Execution Services Ltd following the takeover of ABN Amro’s metals team by UBS Ltd

AUGUST 2006 – Banc of America Securities joins as an ABCM

SEPTEMBER 2005 – UBS Ltd joins as an ABCM. Bear Stearns also joins this year as an ABCM

APRIL 2004 – Calyon Derivatives becomes sole RDM after Credit Lyonnais Rous operations are wound down and the trading booth is vacated when a merger with Credit Agricole subsidiary Carr Futures concludes

APRIL 2003 – IFX Markets Ltd, a unit of IFX Group, becomes an ABM

DECEMBER 2002 – Carr Futures announces its intention to become an RDM of the exchange in early 2003

SEPTEMBER 2002 – HSBC Holdings formally joins as an ABCM when it acquires the necessary shares for membership of the demutualised exchange

JANUARY 2002 – Sempra Energy agrees to pay about $145 million for RDM Enron Metals, which was liquidated after the Enron Corp scandal. Enron Metals, formerly known as MG Plc, had bought fellow RDM Rudolf Wolff Group in July 2000. Wolff was one of the founding members of the LME

OCTOBER 2001 – Investec Bank, part of South Africa’s Investec Group, becomes an ABCM after completing the purchase of the required number of shares

OCTOBER 2001 – RDM ScotiaMocatta Metals scales back its operations, withdrawing from the open-outcry floor

APRIL 2001 – BNP Paribas becomes an ABCM when subsidiary BNP Paribas Commodity Futures Ltd is accepted

APRIL 2001 – ING Baring Futures & Options (UK) Ltd relinquishes its ABCM membership

JANUARY 2001 – Brandeis (Brokers) Ltd relinquishes ABCM status, selling its 2.5% equity stake to RDM Metdist

APRIL 2000 – Brandeis (Brokers) Ltd leaves the floor to become an ABCM

OCTOBER 1998 – Metallgesellschaft purchases RDM Billiton Metals Ltd, the trading arm of producer Billiton, which ceases to be a ring trader

APRIL 1998 – ED&F Man purchases the brokerage accounts and assets of Gerald Metals and assumes its ring-dealing status. ED&F Man is spun off subsequently from UK-listed Man Group, which assumes RDM status as Man Metals (MF Global in 2007)

SEPTEMBER 1997 – Bank of Nova Scotia purchases ring dealer Mocatta. The company changes name to ScotiaMocatta

JUNE 1997 – Deutsche Morgan Grenfell, part of Deutsche Bank AG, withdraws from the floor. It is hit by worsening trade conditions in the wake of the copper crisis

NOVEMBER 1996 – Lehman Brothers Commodities, the trading arm of Lehman Bros Holdings Inc, withdraws from the floor. Trading conditions are hurt after the July copper crisis, when Japanese brokerage Sumitomo Corp announces losses of $2.6 billion run up in 10 years of unauthorised trading by head trader Yasuo Hamanaka

SEPTEMBER 1996 – Fimat Metals, a subsidiary of Fimat International Banque, buys ring dealer Brody White

NOVEMBER 1994 – Ring trader Metdist buys fellow ring trader Metchim, which withdraws from the floor

MAY 1994 – Sucden UK, a subsidiary of French commodity trader Sucres et Denrees, wins ring-dealer status

NOVEMBER 1992 – Credit Lyonnais Rouse, a subsidiary of French bank Credit Lyonnais, is elected as a ring dealer

OCTOBER 1992 – Metallgesellschaft buys ring dealer Charles Davis from Glynwed International. Charles Davis leaves the ring

JANUARY 1991 – Metchim Ltd, part of European copper refiner Hofibel, is elected as a ring dealer

OCTOBER 1990 – Barclays Bank buys LME ring dealer Deak International from New Zealand-based Jarden Morgan. It will trade on the ring as Barclays Metals. Deak itself had bought the ring operation from Johnson Matthey Bankers in the mid-1980s

SEPTEMBER 1990 – Entores, part of the Minemet Group, withdraws from the ring, citing cost pressures

FEBRUARY 1990 – Drexel Burnham Lambert ceases to be a ring trader when its parent company goes bankrupt after the junk bond crisis

LATE 1980s – Metallgesellschaft purchases ring dealer and warehouser Henry Bath and Co

OCTOBER 1985 ONWARDS – During this period, Lazmet, Anglo Chemical, Philip and Lion, Cominco, JH Raynor, Lonconex, HP Thompson and Continental Ore relinquish ring-dealer status in the wake of the 1985 tin crisis, when the International Tin Council defaulted on the LME to the tune of some 800 million pounds

(Editing by Mark Shaw)