LONDON, March 12 (Reuters) - Commodities broker Sucden Financial hopes the planned lifting of pandemic restrictions in England will allow the reopening of the London Metal Exchange’s open outcry floor by July, Chief Executive Marc Bailey said on Friday.
The 144-year-old exchange suspended its ring about a year ago due to the coronavirus pandemic, but proposed in January to make the move permanent and shift to electronic trading.
The exchange, the world’s oldest and largest market for industrial metals, is holding a consultation and said it would announce a decision in the second quarter.
British Prime Minister Boris Johnson said last month he was very optimistic that all COVID-19 restrictions in England would end on June 21.
“With social distancing, we hope, disappearing, and the government’s objective to try to reduce it to zero by the end of June, we hope by July to be back on the floor,” Bailey told the online Fastmarkets Copper Seminar.
Sucden is one of nine Category 1 LME members allowed to trade in the ring, a circle of padded, red-leather benches where traders signal buy and sell orders with hand signals and shouting.
A battle has intensified in recent months between modernists and traditionalists over the future of the ring, the last open-outcry trading floor left in Europe.
Bailey, which along most other ring dealers oppose the ring closure, disputed the LME’s argument that electronic trading would allow a broader range of participants and boost transparency of prices used as benchmarks around the world.
“To say that there are more people participating in my view doesn’t necessarily mean that the quality of the reference price is any better,” he said, pointing to data the LME released showing objections about accuracy have surged since the ring was suspended.
Fred Demler, global head of metals at ring dealer ED&F Man Capital Markets, said price volatility had increased.
“There’s an argument that prices may have been less volatile if the floor were open and dealers collectively could take the other side.” (Reporting by Eric Onstad; Editing by Richard Chang)