LME to publish discussion paper results around June 8; no decision on ring yet

The London Metal Exchange will announce the results of its discussion paper on market structure on or around June 8 and has not yet made any decisions on the whether to reopen the ring, it said.

If the exchange decides to reopen the ring, which temporarily closed in March 2020 due to the Covid-19 pandemic, the earliest possible date would be the end of June, when social distancing criteria are expected be met, it noted.

This would depend on the United Kingdom government announcing that it will lift social distancing guidance at the same time as removing legal limits on the number of people permitted to gather indoors, the exchange noted.

“The LME would additionally need to receive adequate notice of such intentions, so that appropriate notifications and safety preparations could be made for a confirmed return to the ring. The LME is closely monitoring the situation and will provide further information as available,” it added.

The exchange has asked the market for its views on the potential permanent closure of the exchange’s open outcry trading floor, the incentivization of electronic trade through LMESelect, increased fees for the member-to-member telephone market, and an overhaul of the methodology used to calculate margin payments to the clearing house.

June 8 is a later date than had been expected by many in the industry. The discussion paper closed on Friday March 19 and responses were put to the LME board at its recent April meeting.

Trade and industry participants from across the supply chain along with the ring dealing community have publicly opposed the closure of the floor, arguing that there are up to 200 tradable dates per LME metal and this cannot be replicated by electronic trade.

Others argue that the LME should open the floor ahead of the launch of a fully rebuilt LMESelect, which is expected to go live at some point in the second or third quarter of next year.

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