End of an epoch as Hong Kong exchange takes over 135-year old LME

Hong Kong’s stock exchange operator said on Friday its $2.2 billion offer is the preferred bid for the London Metal Exchange.

A takeover of the LME, which handles some 80% of global trade in metals futures, will help Hong Kong diversify out of its slow-growing equities business and help the 135-year old LME  to compete better against Asian hubs like Singapore.

The LME’s board plans to recommend shareholders accept the offer at a meeting expected before the end of July, reports the Toronto Star.

The three losing bids were all from US operators – IntercontinentalExchange, CME Group and NYSE Euronext – and the deal marks a decisive shift in the commodities trading business away from Chicago and London to Asia.

The LME is one of the last bastions of open outcry trading and the system may well turn out to be a victim of the takeover.

The LME last year cleared and matched its first gold trade and has also began providing silver market data. Over the last 7 years electronic trading has grown from 2% to over 70% of the LME's market volume and trading volumes have surged.