Will the LME join the modern world?
As reported in the FT this week:
The London Metal Exchange, the world’s largest base metals market, is looking to turn the 129-year-old exchange from a non-profit entity into a profit-making organisation. The move could pave the way for an outright sale of the exchange or a potential initial public offering.
…The LME is the last big commodity exchange that is membership owned. Its larger peers, the IntercontinentalExchange (ICE), Chicago Board of Trade and the Chicago Mercantile Exchange, have listed in the past five years and, as a consequence, have seen their share prices soar on strong futures trading volume growth. This in turn has added billions of dollars to their market valuation.
and also:
The launch of a strategic review by the LME comes as competition between commodity exchanges becomes more intense as rival exchanges move to compete on formerly sacred turf.
…ICE Futures is owned by the Atlanta-based IntercontinentalExchange, which is understood to be looking at launching electronic base metal futures after the success of recent launches.
“If another exchange wanted to take control of LME’s business, it would be cheaper to do it by launching competing contracts rather than buying it, says John Lothian, president of electronic trading at Price Group, an electronic futures broker.
The exchange plot thickens…
