The Exchange also includes within the document a clear, dynamic strategy to develop a screen trading system which will become operational in the second half of this year. The LME proposes to retain its open outcry system of trading ("ring trading") and to operate screen trading outside those times. The LME intends to decide in the next few weeks on a technology partner to develop the system. The main proposals in the consultation document are:
The LME will become a shareholding company; The board of the new company will be reduced to 13 in comparison with 18 at present; The company will have the facility in a separate subsidiary to develop new forms of business including e-commerce activity; A streamlined formal participation structure with shareholdings being held by the current ring dealing member firms and associate broker clearing member firms, and the provision of continuing involvement at board level of the metals industry; The new LME to continue to be a Regulated Investment Exchange under FSA supervision; The introduction of a screen trading capability outside the ring sessions, with developments of the complexity of the system to be introduced in phases, with the first phase being complete during the second half of 2000; Proposals for some changes to the timing of ring sessions in the light of the introduction of a screen trading system; A timetable for change, with responses being considered by the LME board on 4 July, provision for an Extraordinary General Meeting on 27 July with implementation over the period 27 July onwards.
Speaking today the LME chairman, The Lord Bagri CBE, said: "The LME is a vastly successful organisation and leads the world in its field. Its trading volumes continue to grow. Yet it is clear to me and the LME board that it must contemplate significant change if it is to continue to serve industry as it does.
" Change is necessary to meet customer demand for greater speed, efficiency and economy in business generally, which is itself being afforded by rapid technological advance. The Exchange needs to meet the challenges posed by the rapid developments in the field of technology and be able to take more easily opportunities to grow and develop its business. That means a leaner governance structure and a more strategic oversight function from the board.
" The proposals we are issuing today will allow the LME to reinforce and develop in a positive, proactive way. This is a process of modernisation and maintenance. Modernisation in structure, but maintenance of our relevance to industry and our members.
" The LME has never been afraid of change and has always evolved proactively over its 120 years." Commenting today on technology issues the LME chief executive David King said: " The LME has been at the forefront of the non-ferrous metals world, unchallenged, for many years. Our volumes have grown dramatically and the products we have are absolutely right for the market. We need now to provide for the future by offering a screen trading capability so that we can meet all the expectations of our customers. This facility, together with the structural changes we propose, will also give us the option of developing new products for the market.
"The announcements we are making today will keep the LME at the centre of the new business environment, with our destiny firmly under our control."
