The London Metal Exchange (LME) reported that it scrapped a proposal to shut down its noisy Stock Exchange trading floor, the last one open with open voice trading in Europe, but added that it believes electronic trading is the future.
The office was closed in March 2020 for the first time since World War II, in order to enforce the rules of social distancing due to the COVID-19 pandemic, silencing the crescent of red seats arranged for business and the frenzied gestures and shouts. of the operators.
In January, the world’s oldest and largest industrial metals market launched a consultation process on the closure of its open trading floor, arguing that the forced migration to digital operations had been a success.
“The divergent views in response to the Discussion Paper were particularly evident among traditional participants and some smaller physical clients, on the one hand, and our larger traders and financial participants, on the other,” said Matt Chamberlain, CEO of the LME.
The LME received 192 responses to its inquiry, an unprecedented number.
The LME also proposed in its consultation document a change in the methodology for calculating netting margins to an observed variation model (RVM) from the existing contingent variation model (CVM), a method that allows using the positive balances of some customer accounts to offset negative balances from others.
The firm has committed to retaining the CVM system in the medium term and will embark on a feasibility study that will seek to recreate the cash flows from a CVM model to RVM contracts, the exchange reported.
Physical market participants prefer CVM because cash flows do not have to be managed on a daily basis, only when contracts expire.
Depending on the outcome of a query issued on Tuesday, the official or settlement prices, those traded between 12:30 p.m. and 1:50 p.m. London, will be determined on the physical trading floor, which will resume on September 6, to assist traders. Customers present to use these prices in their contracts.
With information from Reuters.
