LME China Expansion May Include Joint Ventures, CEO Abbott Says

The London Metal Exchange, the world’s largest metals marketplace, may form partnerships to expand operations in China as it seeks to establish its first warehouses in the country and add new contracts.

Hong Kong Exchanges & Clearing Ltd.’s takeover of the LME, which controls more than 80 percent of industrial-metal futures contracts, doesn’t mean it will have “a free pass” to grow in Asia’s largest economy, outgoing LME Chief Executive Officer Martin Abbott said. The LME plans to offer new commodities products in coming years, including some that will be tailored to the Asian market and designed for trading on Hong Kong’s platforms, Abbott said, without providing further details.

“We have to find a way to break into that Chinese market,” said Abbott, who will be replaced as CEO by Garry Jones at the end of this month. “There should be no assumption that we would just walk in and take business. We’ll have to fight for it.”

The LME, which has a network of about 700 warehouses worldwide, is seeking its first foothold in mainland China after being purchased by Hong Kong Exchanges last year in a $2.2 billion transaction. The Asian bourse has said it plans to expand the 136-year-old exchange’s presence in China, the biggest user of industrial metals, and is seeking permission for the LME to establish warehouses in the country.

The LME proposed changes to its warehousing rules in July to speed up deliveries of metal as some waits exceed a year.

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