Trading volumes at the London Metal Exchange hit record high

THE LONDON Metal Exchange (LME) enjoyed its busiest ever month in September as trading volumes hit a record high of 14.09m lots, it was announced yesterday.

The news will be welcomed by Hong Kong Exchanges and Clearing Ltd (HKEx), who agreed to pay $2.2bn (£1.4bn) for the 135-year-old market in June.

It also revealed that average daily volumes on the exchange – which is the world’s leading marketplace for metals such as copper, aluminium and zinc – are up 8.5 per cent on 2011 levels.

In total 119.1m lots have been traded so far this year, the equivalent of $10.9 trillion in notional turnover.

September has traditionally been the LME’s busiest month, as traders return from the summer break and volumes rebound – influenced by the fact that the pricing of the trades on the LME, based on Leadenhall Street near the Bank of England, still trades using traditional open outcry methods.

HKEx will be looking for a good return on its investment but has agreed to maintain current fee levels until 2015, while the exchange itself made a net profit of just £7.7m last year due to a quirk of its former used-owned model.

But the takeover has focussed attention on the operations of LME’s in-house warehousing system, which has been criticised for failing to meet market needs for last-minute metal supplies.