Barclays To Stop LME Floor Operation

Barclays is planning to stop floor trading at the LME, the exchange said today.

Barclays declined to comment specifically on its LME status.

“Barclays has a long track record of managing all businesses dynamically,” the bank said in an emailed statement.

“Barclays remains deeply committed to the base metals market and the London Metals Exchange, which is one of our oldest and most successful franchises within our commodities business.”

The future of the LME was looking good as market participants speculated on Chinese companies taking up the challenge of floor trading as Hong Kong Exchanges and Clearing Ltd. completes its takeover of the 135-year-old LME.

“They (Barclays) are one of the large brokers on the exchange and they give liquidity to other brokers on the floor,” a senior source at a Category 1 broker said.

“I’m not sure there are other people queuing up to become a Cat 1 members. It is quite expensive to become a Cat 1 member. Their business still needs to be transacted and they will use other brokers no doubt but it’s not a good day for the exchange.”

“It’s a sign of the times. They (Barclays) believe that focusing on electronic trading is a logical evolution of the business and will allow them to be more cost effective for clients,” an industry source said.

Posted on: Nov 22, 2012