Forget the Ring: London Metal Traders Focus on the Fine Print
- Proposal to change its margin model could make credit costlier
- Banks are stepping back from financing the commodity sector
Traders react on the trading floor of the open outcry pit at the London Metal Exchange in 2019.
Photographer: Jason Alden/BloombergThis article is for subscribers only.
The London Metal Exchange caught the world’s attention with a plan to close its 144-year-old open outcry trading floor. But many of the bourse’s members were focused on a more technical amendment buried 30 pages into its proposal.
They warn the plan could make it more difficult for brokers to provide credit to their customers, having far-reaching consequences for the way metals markets work. This could increase the costs of trading commodities for industrial users, which are the LME’s core community.