Traders return to London Metal Exchange’s 144-year-old ring

Traders on the trading floor of the open outcry pit at the London Metal Exchange in London, U.K., on Monday. (Bloomberg)
Traders on the trading floor of the open outcry pit at the London Metal Exchange in London, U.K., on Monday. (Bloomberg)


  • Storied trading pit for setting global metal prices reopened with vaccines, tests and hand sanitizer to try to prevent a Covid-19 outbreak

Traders prepared to return to the London Metal Exchange’s storied ring in a test of the City of London’s ability to bring back workers.

Staff from the exchange’s eight dealing firms arrived early for work Monday, 18 months after Covid-19 swept through London and the 144-year-old LME closed the open-outcry ring for the first time since World War II. Dealers planned to check if equipment that matches trades and “squawks" orders back to their head offices was working before commencing trading that would determine prices used in metal contracts world-wide.

The ring’s reopening came as the City awaited an influx of bankers, investors and lawyers who have mostly worked from home since March last year. Streets and stations in the historic financial district remain quiet. Companies such as JPMorgan Chase & Co. and Citigroup Inc. are encouraging staff to return after the summer vacation, though other big employers are delaying plans to bring back employees.

Trading of copper and aluminum has shifted online since the coronavirus brought much of the world’s economy to a halt last spring and traders were forced to stop crowding into the LME’s circle of red couches. Executives at trading firms cheered the homecoming, but acknowledged that it carried risks when Covid-19 cases in the U.K. are on the rise.

“’Inevitability’ is too strong a word, but you send your kids back to school and you just know that between now and Christmas, one of them is going to get Covid," said Marc Bailey, Chief Executive of Sucden Financial Ltd., a ring member.

Some executives are concerned about whether traders will be able to get up to speed. Buying and selling in the ring depends on an arcane system of signals designed to prevent orders getting lost in the hubbub. Three fingers pointing up during the tin session, for example, means a dealer wants to buy the metal for a price ending in three. Traders are expected to know the previous digits.

Asked what he would worry about on Monday, Mr. Bailey said: “The boys being a bit rusty." He hasn’t seen colleagues practicing trading gestures in the office.

The LME, owned by Hong Kong Exchanges & Clearing Ltd., is anxious to stop the ring becoming a Covid-19 hot spot. Traders must be fully vaccinated or take quick Covid-19 tests twice a week. The exchange said it would measure temperatures, provide hand sanitizer and install a one-way system to avoid unnecessary interactions.

A handful of trading floors in the U.S. reopened last year after a short hiatus. There have been individual cases, but no outbreaks, since traders returned to the New York Stock Exchange in May 2020, a spokeswoman said.

About a third of JPMorgan’s London employees are back at the office, and Chief Executive Jamie Dimon is visiting the city this month for the first time since the start of the pandemic. Staff with no office time in their schedules will be required to start coming in from Monday, a person familiar with the matter said.

Citigroup has told most of its London staff to work at the office for at least three days a week from this month and Bank of America Corp. expects most of its employees to return by October, people familiar with the matter said.

Trading in steel billet was due to get under way shortly before noon local time, followed by tin, aluminum, copper and other industrial metals.

The London ring dates back to the early days of the industrial revolution, when merchants swapped metals around a sawdust circle at the Jerusalem Coffee House in London’s Square Mile. It is one of a handful of open-outcry venues to have survived the relentless advance of electronic trading,

Covid-19 almost brought about the ring’s demise. The LME backed down from a proposal to shut the arena for good after Sucden and its rivals said the ring enables dealers to execute complex trades on behalf of clients such as miners.

Some financial traders say the ring allows a coterie of companies to exchange information to which hedge funds and others aren’t privy. To appease this group, the LME said in June that closing prices used to assess the value of financial portfolios will continue to be calculated electronically.

It was one of several changes the exchange has made. In 2019, Chief Executive Matthew Chamberlainbanned drinking on the job following criticism of an alcohol-fueled, macho culture in the ring, where dealers and other staff are predominantly male.

There are question marks over the ring’s survival in the long run. It is one of the last holdouts of old-fashioned floor trading after CME Group Inc. said in May it would permanently close most of its pits in Chicago.

This story has been published from a wire agency feed without modifications to the text


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