Hong Kong Exchanges and Clearing Limited (HKEx) began a new chapter in its development today (Thursday) with the completion of its acquisition of the London Metal Exchange (LME).

Speaking at a plaque unveiling at the LME Ring to mark the occasion, HKEx Chairman Chow Chung Kong said, "The two organisations have proud histories and both have changed with the times while remaining true to the principles of free markets, reliable price discovery, and transparent trading platforms."

"Share trading in Hong Kong, now the home of one of the world’s largest stock markets, began on a small piece of land under a clock tower in 1866, Mr Chow added.  "Eleven years later, when metals buyers and sellers used chalk to draw a circle on the floor of a London coffee shop no one could have foreseen how that circle would become today's famous LME Ring, or how big and influential the LME was destined to be."

"We are embarking on a new journey," Mr Chow said.  "HKEx and the LME share the same vision: to build the best exchange business in the world.  By working together and helping each other, we will grow our businesses in new and exciting ways.

How LME complements HKEx

The vital role of the LME, the world’s leading exchange for the trading of base metals futures and options contracts, enhances HKEx’s position as China’s link to international markets and investors.  The LME also gives HKEx new multi-asset-class capabilities and accelerates its expansion into commodities, currency and fixed income.

The LME has a unique business model including, its prompt (or delivery) structure (with daily prompt dates up to 3 months forward, weekly prompt dates up to 6 months forward, and monthly prompt dates out to 123 months forward for certain metals), open outcry trading in the Ring complemented by 24 hour telephone and LMEselect electronic trading.  It also has the ability to deliver metal physically through a global network of approved warehouses.  These features link it directly to the real economy and, when combined with the high levels of liquidity on the LME, mean that the prices discovered are recognised and relied upon by the metals industry worldwide.  As a result, it plays a vital role in providing risk management solutions to consumers and producers of metals globally.

Plans for further development of LME

LME plans to become a self-clearing exchange group by 2014 through the development of LME Clear. By taking control of the value chain, LME Clear will enable the LME to launch new products and services while enhancing its ability to be responsive to members' needs and diversifying its revenue sources.

HKEx and the LME are committed to focusing together on:

• Preserving and enhancing the LME’s existing business model; 
   
• Expanding the presence of the LME in Mainland China and the rest of Asia; and
   
• Developing the LME over time in accordance with the needs of its members and market participants.

Overviews of HKEx and LME

HKEx is the world’s second largest exchange group by market capitalisation and its securities market is the world’s sixth largest in terms of market capitalisation.  At the end of November this year, shares of 1,540 companies with a combined value of US$2.7 trillion were listed at HKEx, including shares of 714 Mainland enterprises. 

The LME is an international exchange with an estimated 80 per cent market share of global base metal futures trading volume. Last year, the exchange had record high trading volume of 146.6 million lots and the notional value of all contracts traded was US$15.4 trillion.  In the first 11 months of this year, 147.44 million lots were traded on the exchange.

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