London Metal Exchange traders fined for standing up
In a unusual mass disciplinary notice, the London Metal Exchange said Tuesday that traders from nine of the 11 floor-dealing firms, including big names such as JPMorgan and Société Générale, will face fines for over £1,000 (US$ $1,700) after seen “standing in the Ring”.
Reuters quotes LME spokeswoman Kathy Alys saying the measure seeks to keep trade transparency. “The LME operates a ring, not a pit. Dealers that stand create an unfair advantage and might obstruct the view of other dealers and LME pricing committee members," she said.
Following a 19th century tradition, when metals vendors drew a circle on the sawdust floor of a London coffeehouse, traders today must sit on red leather sofas arranged in a 20-foot diameter ring, Bloomberg reported. Some other bourses, such as the New York Mercantile Exchange, are pits with steps that allow traders a clear line of sight. That’s why it’s considered key for LME dealers to remain seated and so avoid obstructing other metal traders’ line of sight.
And while warnings for standing are regular, penalties are not. The last time a dealer was fined for such an offence was in January 2011, when nine people were forced to pay a total of £13,750 and one of them was also suspended from trading for two days because it was his second offence within three months.
Other than standing up during open-outcry, the LME outlaws chewing while dealing, reading newspapers or magazines in the trading area, “slovenly behaviour, overzealous behaviour and drunken behaviour” and the throwing of projectiles. Traders also must observe a formal dress code.
Image courtesy of the London Trading Exchange.