LME to shift to electronic trading next week in line with social measures to contain COVID-19

London Metal Exchange

EUROPE’S last open-outcry trading venue – the London Metal Exchange (LME) – will temporarily close next week and move its activities to its electronic system in line with the restrictions on social life to fight the COVID-19 outbreak, said Reuters.

The only other time the 143-year old LME’s circle of padded, red-leather seats has shut was during World War II when the whole exchange was closed, a spokeswoman told Reuters.

The move creates challenges for a complex market structure that allows for a huge number of short-term contracts to be traded, almost exclusively in the ring, LME members said.

“It’s quite a dramatic change, but coronavirus is dramatic,” an executive at a member firm allowed to trade in the ring told the newswire.

The exchange, owned by Hong Kong Exchanges and Clearing Ltd. , said on Monday an employee of one its ring-dealing members had contracted the coronavirus.

“The LME believes it important to adapt its trading approach to heed government advice,” said in a statement on Tuesday.

“If current trends continue, the LME anticipates that it will temporarily move to fully electronic pricing on Monday 23 March.”

The LME and members are consulting on how best to move to electronic trading, the executive said.

“It’s clearly a challenge about how to settle the forward part of the market,” he added.