LME Approves First Chinese Company on Floor to Join JPMorgan

Jan 08, 2014 7:01 pm ET

Jan. 9 (Bloomberg) -- The London Metal Exchange, the world’s largest metals bourse, accepted the first Chinese-owned broker to trade on its floor, joining JPMorgan Chase & Co. and nine other companies.

GF Financial Markets (U.K.) Ltd. was approved for a Category 1 membership, the exchange said in a statement yesterday. GF Financial Markets was created from the $36.1 million acquisition of Natixis Commodity Markets last year by a unit of Guangzhou, China-based GF Securities. The floor team will be headed by Martin Woodall, who joined the company last week, according to two people with direct knowledge of the hire who asked not to be identified because it wasn’t made public.

“Maybe that’s a start to more members from Asia, and China in particular,” Robin Bhar, an analyst at Societe Generale SA in London, said by phone yesterday. “We have to see if this now turns into a trend.”

Hong Kong Exchanges & Clearing Ltd. bought the LME for $2.2 billion in 2012. Chief Executive Officer Charles Li has said he wants to be in China, the biggest buyer of industrial metals, helping to create an “East Wing” for the LME by easing curbs for traders in China and changing contracts to attract Asian clients.

“We welcome GF Financial Markets to the ring and look forward to expanding our client base further, particularly in the Asia region,” Garry Jones, LME CEO, said in the statement.

Shout Orders

The LME, founded in 1877, operates London’s last open outcry trading system. Brokers from JPMorgan to Amalgamated Metal Trading Ltd., part of a group that also distributes and processes metals, shout out orders across a 6-meter-wide (20- foot) ring. Contracts are also handled by phone and electronically. A Bank of China Ltd. unit was approved as the first Chinese company member in 2012.

Hong Kong Exchanges pledged to maintain the LME’s floor trading at least until January 2015. GF Financial Markets retained some of Natixis’s employees including Andy Gooch, its managing director, and previously was a Category 2 member which entitles it to trade by phone and on LME Select, the exchange’s electronic trading platform. Other traders include Goldman Sachs Group Inc. and Morgan Stanley.

Brokers Leaving

Natixis Commodity Markets, a former unit of Natixis SA, left the LME floor in July 2012 after the Paris-based bank shut its commodities brokerage business. Jefferies Group Inc., which hired some of Natixis’s floor traders, left the floor in November after 14 months. Woodall stopped trading for Jefferies in June, the LME said then in a notice. Barclays Plc exited the ring in 2012.

The LME also approved Vitol SA, an energy trading firm, and Lee Kee Group Ltd., a Hong Kong-based metals supplier, as Category 5 or associate trade members, the exchange said separately today. GF Financial’s start date will be announced later, the LME said.

--Editors: Claudia Carpenter, Dan Weeks