LONDON—The London Metal Exchange is proposing closing its open-outcry ring, where traders have swapped metals like copper and lead using shouts and hand signals for 144 years, in a bid to attract more financial players.
The LME temporarily closed the ring when Covid-19 ripped through the U.K. in March, judging the tight circle of red couches that dozens of traders crowd around to be a health risk. The exchange, owned by Hong Kong Exchanges & Clearing Ltd.
is now proposing shutting it for good.
The ring began life when the LME was founded above a London hat shop in 1877, though its origins date to sawdust circles around which merchants bought and sold metals in the early 1800s, when they were in high demand as the industrial revolution gathered steam. It survived two world wars, the decline of the U.K. as the world’s leading industrial economy and the rise of China as the largest metals consumer.
However, the coronavirus pandemic may prove to be a test too far. The LME said Tuesday that electronic pricing had served the market well during the pandemic and brought greater transparency around the way that prices are set. It also said the closure would attract a broader group of participants to the market, beyond the physical-metal players that tend to favor the ring over the LME’s electronic platform.