ICAP Said to Be in Talks With ADM to Transfer LME Trading

ICAP Plc is in talks to transfer its trading business on the London Metal Exchange to ADM Investor Services International Ltd., according to two people familiar with the matter.

The London-based brokerage will close its LME desk at the end of the year, said one of the people, who asked not to be identified because the information is confidential. Both companies are Category 2 members of the LME, which means they can trade electronically and by phone, and issue contracts. ICAP’s metals business is headed by Robert Rees.

Bryony Scragg, a spokeswoman for ICAP in London, and Kathy Alys, a spokeswoman for the LME, declined to comment. Jackie Anderson, a spokeswoman for ADM, didn’t return an e-mail requesting comment.

ICAP, the world’s largest broker of transactions between banks, has changed its business to handle more electronic transactions and reduced staff at the global broking division, which houses trading desks that execute orders by telephone. The company’s exit from metals comes as banks including JPMorgan Chase & Co., Deutsche Bank AG, Barclays Plc and Credit Suisse Group AG have exited or scaled down their commodities business amid increased regulatory scrutiny and capital requirements.

Metal Volatility

The LME Index of six main industrial metals has fallen 4.4 percent in 2014 led by declines in copper. A measure of the index’s volatility over the past 100 days fell to the lowest level on record in March, data compiled by Bloomberg show. The LME, the world’s biggest industrial metals marketplace, traded $14.6 trillion worth of contracts last year.

ICAP became a member of the LME, the world’s largest marketplace for industrial metals, in May 2008. It hired Rees to head the business with Steve Bingley the same year and expanded into metals options trading in 2009. The company also opened metals offices in New York and Hong Kong in the past few years.

Shares of ICAP fell 1.1 percent to 415.40 pence at 10:47 a.m. in London trading, for a loss of 7 percent this year.

ADM Investor Services International is a brokerage unit of Archer-Daniels-Midland Co., the world’s largest corn processor. The Chicago-based company last year hired Fabian Somerville-Cotton, a former LME board member and global head of listed commodity sales at HSBC Holdings Plc, as a managing director in London. ADM shares have soared 17 percent in 2014.

Reuters was first to report that ICAP will shut its LME desk.

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