London: Barclays Plc withdrew on Thursday from floor trading on the London Metal Exchange, the world’s biggest metals bourse, as the bank reviews its businesses to cut costs.
The London-based bank became a Category 2 member of the exchange with immediate effect, meaning it will continue to trade electronically and by telephone, the LME said in a notice to members. Barclays remains deeply committed to the metals market, it said in a statement.
Barclays’ withdrawal leaves 11 companies still in the LME’s 6-metre-wide (20-foot) ring, London’s last venue for open-outcry trading. Natixis SA also stopped floor trading in July to become a Category 2 member, and Jefferies Group Ltd. joined in September, hiring traders from the French bank. Barclays Chief Executive Officer Antony Jenkins is reviewing which parts of the bank will be sold or shrunk as it seeks to bolster returns.
“They’ve probably decided this function isn’t critical,” said Ian Gordon, a London-based analyst at Investec Plc who recommends buying shares of Barclays. “Is it a continuation of the cost cutting program? Yes, probably.”
The 135-year-old LME handles more than 80% of world trade in industrial-metals futures. Its shareholders, including Barclays, approved a $2.2 billion takeover by Hong Kong Exchanges & Clearing Ltd. in July. The transaction is expected to close by the end of the year, LME CEO Martin Abbott said earlier this month. Barclays will get £32.3 million ($51.5 million) for its stake, data compiled by Bloomberg show.
The bourse’s trading volume will rise to a record for a second consecutive year in 2012, Abbott said on 15 October. The exchange handled 146.6 million contracts valued at $15.4 trillion in copper and other industrial metals last year. Its Category 1 members include JPMorgan Chase & Co., Marex Spectron Group and Sucden Financial Ltd. “The ring is still an important issue,” said William Adams, an analyst at Fastmarkets.com in London. “The more people there you have the more liquidity you have. If a large player drops out then that has an impact.”
There are now 28 Category 2 members, including Goldman Sachs Group Inc., UBS AG, Standard Chartered Bank Plc, Standard Bank Plc and ICAP Plc. “We recognize that business models change and we are pleased that Barclays Bank remains deeply committed to the LME and the base metals markets, Abbott said in a statement on Thursday. BLOOMBERG