Usually after a London Metal Exchange discussion paper there is a decent idea of what the outcome is likely to be. But this time around, it seems much harder to tell which path the LME will take.
The proposals under debate include the permanent closure of the exchange's open outcry trading floor, known as the ring, which dates back to 1877.
They also include the
incentivization of electronic trade through the exchange's 20-year old platform, LMESelect, increased fees for the member-to-member telephone market, and an overhaul of the methodology used to calculate margin payments to the clearing house.
The exchange had in all likelihood anticipated opposition to the closure of the trading floor from its ring dealing members, the brokers whose business models revolve around servicing the trade and industry clients at the heart of the LME.
What it had perhaps not expected was that the package of restructuring proposals would not only galvanize the brokerage community in defense of the ring and the current margin methodology, but that many of their trade and industry clients would also agree.
Those trade and industry voices are...