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By Eric Onstad
LONDON (Reuters) - The London Metal Exchange (LME) said it might revise a planned hike in trading fees after customers complained that it could hurt their businesses.
The 137-year-old LME announced an average 34 percent increase in fees in late September as owner Hong Kong Exchanges and Clearing Ltd (HKEx) (0388.HK) moved to boost profits after buying the exchange for $2.2 billion.
But customers protested. Broker Triland Metals warned that the higher fees due to take effect on Jan. 1 would force brokers and banks to ditch some commission-free terms and review their business models.
The actual cost of transacting in the LME's open outcry pit and on its electronic platform could double next year, Triland said.
The 34 percent increase highlighted by the LME was an average figure and included clearing fees, which were unchanged.
The LME said in an emailed statement on Wednesday that it was committed to the fee hike, which will allow it to invest more in the world's biggest industrial metals market, but it was also keen to hear feedback.
"We announced the fee changes early to allow time for this process, and we have held more than 30 individual meetings to date to discuss the matter," LME spokeswoman Kathy Alys said in the statement.
"We have received valuable feedback, and as we analyse this, it is possible that the tariff could be subject to minor revisions." She declined to give details on how the fees may be revised.
PRODUCTIVE COMPROMISE
One of those who met with the LME was Michael Overlander, chief executive of broker Sucden Financial. "I was certainly one of those who were keen to find some form of productive compromise," he told Reuters.
"I would think the exchange has probably had a number of different proposals that hopefully will enable them to address the concerns that have been expressed by quite a few people."
While LME fees per lot are still lower than those of rival CME Group Inc (O:CME), total costs can be higher due to the differences in trading on the two exchanges, he added.
"It's a principal-to-principal contract on the LME, and for that transaction to be registered it has to go through series of trades, which means the costs to put a transaction to bed are quite high."
Before HKEx bought the LME in 2012, it was owned by the banks and brokers that used it, and trading fees were kept very low for members.
HKEx promised when it was bidding for the LME that it would freeze the low fees during an initial period, but the moratorium expires in January.
(Reporting by Eric Onstad; Editing by Veronica Brown and Jane Baird)