StoneX Cuts LME Team as Brokers Brace for Slump in Ring Volumes

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Commodities brokerage StoneX Financial Ltd. is reducing the size of its London Metal Exchange floor-dealing team by about a third in anticipation of more muted trading activity when the so-called Ring reopens, according to people familiar with the matter.

The move by StoneX is the first concrete sign that the LME’s compromise plan to reopen the Ring in September could impact the business models of floor dealers who will be critical to the long-term viability of one of the world’s last open-outcry markets. Under that plan, closing prices that are widely used by brokers, banks and investors to value their positions will continue to be settled electronically, cutting off what’s traditionally been a key source of revenue for Ring-dealers.

StoneX had a 15-strong Ring-dealing team prior to the restructuring, and will remain among the largest dealers on the floor when it reopens, said one of the people, who asked not to be named discussing staffing matters. The brokerage remains committed to the floor, but the cuts are a direct consequence of the LME’s decision to permanently move pricing for its closing benchmarks away from the Ring, the person said.

A spokesperson for StoneX declined to comment.

The LME suspended trading on the floor as the pandemic struck last March, but earlier this month it backtracked on a plan to close it permanently. While the LME bowed to pressure from brokers and industrial hedgers who said closing the Ring could be detrimental to trading activity and the pricing process, it will only be using the floor to establish official prices that are widely used in the physical industry.

StoneX Cuts LME Team as Brokers Brace for Slump in Ring Volumes

StoneX has been a staunch supporter of the campaign to save the floor, but it is reducing the number of account executives and clerks working on its Ring-dealing team in anticipation of a significant drop in trading activity as it reopens, one of the people said.

Simon Van Den Born, president of Marex, another large Ring-dealer, earlier this month said it could become “commercially difficult” to staff a floor team.

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