LME CEO Jones Exits After 3 Years of Leading Metals Bourse

  • Jones retires from role with immediate effect, HKEx says
  • COO Matthew Chamberlain will be interim chief executive

The London Metal Exchange’s Garry Jones stepped down as chief executive officer after a three-year stint steering the world’s biggest metals bourse.

Jones, 58, will retire from his position at the exchange and serve as an adviser until the end of this year, according to a statement from Hong Kong Exchanges & Clearing Ltd, which owns the London bourse. Chief Operating Officer Matthew Chamberlain, 34, will become interim CEO.

Jones is the second senior LME executive to leave in two months, and his departure comes as the 139-year-old exchange faces broker complaints over higher fees and a slump in trading volumes. He spearheaded efforts to modernize the exchange and transform it into a commercial operation, attracting new types of users such as high frequency traders.

“Garry had a difficult job to do at a difficult time," Michael Overlander, CEO of Sucden Financial Ltd, said by phone from London. “He was a tough negotiator, but a perfect gentleman as well.”

Metals Hub

Before the takeover by Hong Kong in 2012, the exchange was owned by its members and the business strategy was to benefit them, rather than maximize profits. The LME is the center of the world’s metals trade, setting benchmark prices for copper and aluminum.

The LME has suffered recent setbacks in two major outages in the past six months. On Jan. 12, electronic trading was delayed by five hours during the Asian trading day due to a connectivity issue.

The next CEO needs to tackle issues such as rising volatility that’s problematic for industrial hedgers using the exchange, and soothe broker concerns over the rise of algorithmic trading, according to Malcolm Freeman, a director at Kingdom Futures and broker on the LME.

“The general consensus is that they’ve got to get someone out of the industry who already understands the way the LME works,” Freeman said from London.

While Chamberlain has taken on the position on a temporary basis, he could be a suitable candidate to do so permanently, Overlander said. Chamberlain was named COO in December, succeeding Stuart Sloan, who left the exchange. Chamberlain was previously head of business development at the LME.

“His time at the LME has been relatively short, but that doesn’t mean he’s incapable of picking up the reins that have been handed to him on a temporary basis,” he said.

Tough Year

Michael Farmer, co-founder of Red Kite Group, one of the biggest commodity hedge funds, told attendees at the LME’s annual dinner last year that high-frequency trading, excessive fees and regulation were damaging the marketplace.

LME executives have responded to criticism, saying traders are blaming the exchange after a tough year for the entire industry.

“Members have had a very tough year, their volumes are down, their revenues are down,” Jones said in an interview in October. “You’re starting to see difficult markets and you’re starting to feel it more.”

Average daily volume in 2016 was down 7.7 percent from the previous year. In its latest earnings statement, the bourse said commodity revenue in the first nine months of 2016 fell 11 percent compared to a year earlier.

Still, Jones presided over rising profits during his time at the LME as higher trading and clearing fees benefited the exchange.

In December, the LME said it would freeze its main clearing charges for 2017 and offer concessions to producers and consumers, such as granting traders free access to data.

— With assistance by Martin Ritchie, Benjamin Robertson, and Mark Burton

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