LORD COPPER: The guard changes at the LME

So, as well as Martin Abbott announcing his departure from the London Metal Exchange at the end of the year, head of business development Chris Evans has also gone.

Evans was not as high profile as Abbott, but in the five or so years that he has been at the exchange, he has been quietly influential in several areas as well as being Abbott’s trusted lieutenant.

He played a major part in bringing the cobalt and moly contracts to the market, and helped nurse them through their formative weeks and months.

Latterly, he was also significantly involved in the lead-up to and execution of the sale of the exchange to HKEx.

Now, while it’s true that Evans has never been a trader (being, like Abbott, a former editor of Metal Bulletin), there is no question that the LME is losing a considerable amount of experience just as the new owners begin to get to grips with their acquisition.

It may be, of course, that in the context of aluminium-storage related lawsuits, the departures will be seen as the end of the LME’s old regime, making way for new thinking and a new approach (as yet unarticulated) to the warehousing problem.

The metal market loves rumour and speculation.

Inevitably Evans’s departure has allowed people to speculate that the exchange in Hong Kong will use his and Abbott’s exit as a chip in the fraught game that is going on with the aluminium industry.

What type of ceo?
But probably more important are the implications for the type of candidate to take over as ceo at the beginning of next year.

There are many talented people at the LME with a great deal of experience and knowledge of operating an extremely successful market.

But with two of those with the strongest member contact departing, it seems logical to expect that that same member contact would need to be bolstered.

The public face of the exchange is what is being lost, to a greater degree than the day-to-day management of its operations.

As the members begin to settle in to the changed relationship between themselves and the management (and owners) of the exchange, what is going to be important is the management of their expectations of and their reaction to that different environment.

Managing relationships
The departure of Abbott and Evans will potentially create a dislocation in the continuity of the member/exchange relationship.

So the odds on an internal appointment – either from the Hong Kong or the London side – would appear to have lengthened considerably.

Where they’ve shortened, at least in my view, is on the new ceo coming from the member fraternity.

There are several likely-looking candidates, either currently with a member or having recently departed.

Perhaps a short-term (say two years or so) transitional appointment could be made to look quite attractive as a way of topping off a career in the business.

Of course, that’s not a long-term solution, which I concede may be the owners’ preferred choice; but I do think for the near-term, managing the exchange/member relationship is going to be a vital – and potentially challenging – task, and turning a poacher into a gamekeeper may be the most satisfactory route in the short term.

Lord Copper
editorial@metalbulletin.com