The London Metal Exchange has infuriated some members with its decision to remain open during Queen Elizabeth II’s funeral, further inflaming tensions between the market and its users.
Metal brokers and clients have reacted furiously to the 145-year-old exchange’s ruling to open its electronic market but close its famous pit on Monday. It means that many traders will work as usual instead of being able to pay their respects to the deceased monarch. Trading on the London Stock Exchange, in comparison, will be closed for the bank holiday.
The decision further stokes the tension between the exchange, owned by Hong Kong Exchanges and Clearing, and the two camps of its main users.
On one side are longstanding members who trade on behalf of users wanting to buy the physical commodity, and electronic traders, who seek to profit from successful bets on the value and direction of the asset.
In March the LME angered hedge funds and market makers when it cancelled a day of trades and halted trading in nickel for a week when the metal’s price doubled.
A group of five investment firms launched new legal action against the LME on Friday, months after hedge funds Elliott Management and Jane Street sued the exchange.
Metal industry executives privately question whether the exchange would have taken the same course of action if the company at the centre of the short squeeze — Tsingshan — had not been Chinese. Last year the LME was forced to ditch a plan to close its Ring open outcry pit and go all-electronic after complaints from users.
In a letter to members and warehouse companies, LME chief executive Matthew Chamberlain said the international nature of its market and operational risks stemming from the short notice meant that the bank holiday had to be considered as a business day. The LME will also donate all fees raised on Monday to charity.
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