Societe Generale International has announced its decision to withdraw from the London Metal Exchange’s (LME) open-outcry trading floor, effective August 27. This move raises concerns about the future viability of the trading ring, which is the last remaining open-outcry venue in Europe.
The LME, the world’s oldest and largest market for industrial metals, has seen a significant decline in membership for its trading ring, dropping from around 30 members in the late 1980s to just seven following Societe Generale’s exit. The trading floor, known for its distinctive circle of padded red leather seats, relies on traders using hand signals during intense five-minute trading sessions for metals such as copper, aluminium, zinc, lead, nickel, and tin.
The prices set on the LME trading floor are critical, serving as the global reference for physical supply contracts for metals producers and consumers. With Societe Generale transitioning from a Category 1 member, which allows direct participation in the ring, to a Category 2 member, it will still be able to trade for its own account and on behalf of clients using the LME’s electronic system.
A source close to Societe Generale indicated that there would be no change in the bank’s support for its metals clients despite the membership shift. The LME previously lost another ring-dealing member, ED&F Man Capital Markets, in 2021 due to an acquisition by Marex.
The LME has established criteria for potentially liquidating the ring if the number of Category 1 members falls below six or if their trading volume diminishes significantly. However, the exchange confirmed that these criteria have not been met with Societe Generale’s departure.