London’s Embattled Metals Trading Floor Loses a Top Dealer

(Bloomberg) -- Triland Metals has resigned as a floor-dealing member of the London Metal Exchange after nearly fifty years in the historic open-outcry trading ring.

The specialist metals broker, set up by Mitsubishi Corp. in 1971, will continue to trade on the LME as a “category 2” clearing member, but will not return to the floor when it reopens next month, according to a notice sent to customers.

The move will be a blow to supporters of “the Ring,” who have lobbied hard -- and so far successfully -- to ensure it survives the pandemic. Among the last of its kind in the world, the trading floor was closed due to Covid-19 in March last year and contracts have since been priced electronically.

Earlier this year the LME announced plans to shut the floor permanently, but backtracked after an uproar from users and brokers who said doing so would be detrimental to pricing and liquidity. It’s now planning to reopen the Ring on September 6, albeit with a diminished role in setting benchmark prices.

However, Triland’s departure will reduce the number of floor dealers to eight, and is likely to create fresh concerns about declining liquidity on the floor. The LME has said it could move to shut the Ring if there are fewer than six dealers active on the floor.

“Given the LME’s new direction of travel, the diminished responsibility of the Ring, and Triland’s business priorities, we feel the time is right for us to redeploy our resources and capabilities,” Chief Executive Martin Pratt said in the letter. “Our decision has been taken with great care and consideration, and looking ahead towards the next 50 years.”

The LME plans to adopt a hybrid pricing model from next month, with the Ring being used to set benchmark prices around midday, while evening closing prices will continue to be set electronically. The decision has drawn criticism from Ring-dealing brokers who fear it will significantly reduce revenues.

In June, StoneX Financial reduced its floor-trading team by about a third in anticipation of more muted trading activity when the floor reopens. Triland’s resignation was reported earlier by Fastmarkets.

The LME is still planning to reopen on the Ring on Sept. 6 and Triland’s resignation will not trigger a “liquidity event” that could prompt it to close the floor, a spokeswoman for the bourse said in an emailed statement.

©2021 Bloomberg L.P.