By Pratima Desai
LONDON (Reuters) - Eight of the nine members trading on the floor of the London Metal Exchange (LME) will return when it reopens in September, though some expect reduced volumes due to a hybrid system of open outcry and electronic trading.
Prior to March 2020, when COVID-19 led the exchange to shutter its trading floor for the first time since World War Two, closing and official prices were determined via open outcry.
After a consultation with metal consumers and producers, LME brokers, funds and commodity traders earlier this year, the exchange decided trading on Europe's last open outcry floor will resume on Sept. 6 - but not fully.
Official prices used to settle LME contracts will still be established in the second round of open outcry trading between 1230 and 1315 London time.
However closing prices, which are used to calculate margins, will stay on the LME's electronic system, LMEselect, meaning volume losses for some members.
"We will go back to the ring, see how volumes go," one source at a floor trading member said.
Floor members Amalgamated Metal Trading, ED&F Man Capital Markets, GF Financial Markets (UK), Marex Financial, StoneX Financial and Sucden Financial told Reuters they would be back on Sept. 6.
"We are fully committed to going back to the ring when it reopens with a full complement of staff," said ED&F Man Capital Markets' Global Head of Metals Fred Demler.
"Ring trading is difficult if not impossible to replicate on a platform. It provides the liquidity which makes for efficient and reliable pricing, which is critically important for commercial hedgers, speculators and financial institutions."
Sources with direct knowledge of the matter said Societe Generale (PA:SOGN) International and CCBI Global Markets (UK) will also be going back to the ring on Sept. 6.
Not all members will return with the same workforce. "The structural changes being made by the exchange have precipitated a need for us to adjust our staffing levels," said Kevin Tuohy, co-head of base metals at StoneX.
The ninth member, Mitsubishi Corp-owned Triland Metals, said last week it would end nearly half a century on the LME floor following the change to hybrid trading.
As part of the new system, the open outcry floor will close if total ring members fall below six, or if volumes drop below a certain level.
Members of the LME, which is owned by Hong Kong Exchanges and Clearing Ltd, trade industrial metals including copper and aluminium.