- Traders used phones as LMEselect was hit by connection issue
- Problem unrelated to fault shutting London office until August
For a few hours this morning, old-fashioned telephone trading saved the world’s biggest metals market from total standstill.
The London Metal Exchange suffered a near four-hour delay to the start of electronic trading on Friday because of a connectivity problem with an external network provider. Brokers had to rely on phones until 4:55 a.m. London time, leaving Asian traders annoyed for missing a chunk of their workday.
It was the second challenge for the bourse this week: a structural fault at its London building meant floor trading will take place at an emergency site in Essex, about 40 miles outside of London, until early August. The two issues aren’t related, the LME said.
“At first the clients were frustrated, that’s for sure, but we just had to wait for the restart of the platform,” Anselm Li, head of sales and trading at broker Triland Metals Singapore Pte Ltd., said by phone.
Phone trading between brokers and clients 24 hours a day typically accounts for about 45 percent of all LME trading, with electronic and floor deals making up the rest, Chief Executive Officer Garry Jones said earlier this year.
About $12 trillion of copper and other metals change hands each year on the LME, which is owned by Hong Kong Exchanges & Clearing Ltd. LMEselect trading normally starts at about 1 a.m. London time, so the fault occurred during business hours in China, the world’s biggest metals buyer.
Technical problems with LMEselect have happened before, leaving traders to resort to deals by phone or on the trading floor known as the Ring. The electronic platform was suspended for about three hours in 2013. Similar issues caused a halt in 2011.
The exchange operates Europe’s last open-outcry trading floor at its 10 Finsbury Square building. Because of a structural issue on a non-LME floor found last weekend, traders have been using a replica of the Ring in a warehouse in Chelmsford, northeast of London. All trading, clearing and other systems will operate normally while the recovery site is in use, it said.