LONDON, May 4 (Reuters) - London Metal Exchange (LME) trading fees fell 17% to $263 million in the first quarter of this year compared with the same period of 2020, a results update from parent Hong Kong Exchanges and Clearing (HKEx) showed.
“LME trading fees dropped by $53 million... due to the 21% decrease in chargeable average daily volume of metals contracts traded in first quarter 2021,” said a release posted on HKEx’s website last week. “(This was) partly offset by a higher average fee per contract.”
Traders who use the exchange attributed the drop in volumes and revenue to the closure of Europe’s last open-outcry trading floor, or ring, last year due to the coronavirus pandemic, a measure not taken since World War II.
In January the LME proposed in a discussion paper closing the ring and moving to an electronic system permanently.
“Volumes are impacted by multiple external factors, including the strong volatility of first quarter 2020 not being repeated in first quarter 2021,” the LME said in response to requests for comment.
“The LME has also heard many views from its market – some are of the opinion that volumes would increase if the ring were to be re-opened, whereas others feel that volumes would increase more in a pure electronic market.”
“We are open to all views and are incorporating these into our discussion paper exercise.”
Last October, LME Chief Executive Matt Chamberlain said: “The position remains very much that we want to reopen (the ring)...we see business continuity during the coronavirus situation, and the future of the ring, as separate discussions.” (Reporting by Pratima Desai; Editing by Jan Harvey)