Landmark reforms next year on the London Metal Exchange to speed up and deepen trading will challenge brokers that collect client orders over the phone to further automate their transactions or risk falling behind, leading technology provider Sinara Consultants has said.
Mirroring moves across global market infrastructure to boost liquidity and speed up transactions to help customers cut costs and risk, the LME intends to introduce two sweeping changes in the first quarter of 2026: crossing of trades for client order flow, and minimum volume thresholds for block trades.
Electronic trading currently accounts for less than half of total trading on the LME as many market participants trade inter-office over the phone or via email or other external systems, making it an outlier as similar exchanges are typically fully electronic already.
“The LME changes are part of a wider acceleration in markets globally, forcing participants to rethink both their technology and business models,” Hamish Adourian, Sinara’s head of sales and marketing, told Mondo Visione.
Hamish Adourian, Head of Sales and Marketing
“This isn't just a tech thing either. It's about processes, governance and everything else related to that as well. It’s certainly at the forefront of their minds for anyone responsible for trading and clearing operations at the very least,” Adourian said.
Speaking ahead of LME Week, the annual gathering that draws thousands of participants in metals trading from across the world to London, Adourian said there was a strong connection between structural reforms, technology adoption and rising expectations among regulators who are keen to improve transparency in markets.
The LME is not forcing brokers to redirect all of their off-exchange trades onto its platform but using cheaper trading fees to compete better with over-the-counter (OTC) or off-exchange ‘prints’ or transactions.
Inevitably such major changes have sparked resistance among some market participants, but others who are already teed-up or are set to adopt automated crossing and ‘smart slicing’ technology will likely have an advantage.
However, voice-heavy desks that lean on small, inter-office trades face having to adapt their business model, Adourian said.
“It’s going to impact for many the core business model. For brokers who rely on lots of small, bespoke, relationship-driven deals, the new rules might be a challenge to adapt to,” he said.
“At the same time, there’s definitely an opportunity for those who can leverage technology to stay ahead.”
Tom Habibi, Sinara's head of engineering, said the reforms will require taking a ‘holistic’ look at a broker’s IT systems, rather than simply adding an extra module to legacy systems, given the nature of the pending market reforms on the LME.
Tom Habibi, Head of Engineering
“It changes the data flows, risk checks, and reporting and reconciliation requirements across the whole trading infrastructure. Firms that treat this as a bolt-on will struggle,” Habibi said.
“It’s about integrating block trade functionality into a resilient, end-to-end workflow. That’s where tech can make the difference between being compliant and being competitive,” Habibi added.
Adourian said market participants will have to juggle the LME changes with other major reforms, including commodity derivatives exchanges (including the LME) taking responsibility for managing position limits in their own markets by early July next year, putting pressure on exchanges to scrutinise market structure more closely.
In addition, market participants and exchanges face heightened demands from regulators to ensure that their IT systems are resilient and can recover from cyberattacks or operational glitches within specified times.
The wider trading industry is also shifting to faster settlement cycles as Europe copies Wall Street's shift to T+1 or one-day settlement in stocks in the latest sign of how markets in general are speeding up, requiring participants to respond as the prospect of instant settlement loomed, Adourian added.
“Eventually there will be a T+0 and all the implications around what that means. People are expecting those processes to be faster and faster. You need technology to help with that, but we also need to think about how that tech is used as well.”
Sinara said there will also be greater reliance on having technology for monitoring margins in near real-time during the trading day to check whether they are sufficient, a key lesson learned by regulators and market participants after Russia’s invasion of Ukraine triggered huge moves in energy and nickel markets.
“We see how markets evolve, regulations evolve, and if your technology can’t keep up with that, you end up paying the price later,” Habibi said.
ASSEMBLING LEGO
Sinara was set up 35 years ago with two of its founders still part of its 50 staff, making it a veteran in a sector known for its rapid entries and exits of firms. It provides bespoke trading, clearing and settlement software across the financial sector, with long experience in the LME market.
With the company facing competition from deep-pocketed players that employ thousands of staff and outsource work to centres in India and elsewhere, Sinara has opted to keep its employees in the UK with no operations outsourced, a business model it sees as making it particularly responsive to customers.
Sinara's roots are in market data technology solutions, but over the years it has broadened out to building, delivering and helping to maintain and enhance trading systems, offering a joined up 'straight through processing' approach that includes using cloud computing.
It challenges the trading sector's longstanding structure of rigidly defined front, middle and back offices.
To manage costs for customers who face a welter of demands on their IT budgets, Sinara offers to slot together in a tailored way modular components it has already built, like assembling a Lego model to replace only what's necessary rather than the more expensive option and greater upheaval of starting from scratch to fully replace legacy systems, Adourian said.
“Lego is actually a great analogy as it might seem simple to snap the bricks together but creating an amazing model still takes some effort and experience! So it's that expertise around how to put it all together, put the finishing touches as well as extra customer customisation on top of that, which is what essentially we are offering as a business and the support that goes with it,” Adourian said.
The increasing use of artificial intelligence (AI) in financial services is already being felt in the software sector with the use of apps like ChatGPT to write code, leading to some coding jobs disappearing.
Sinara said that while AI might improve productivity across what it calls the software development lifecycle, ultimately it will need to be used by expert software engineers, project managers, quality assurance analysts, and, crucially, support analysts. That human touch is also key to reassuring customers when things go wrong.
“Software is software,” Habibi reflected. “Something will always happen eventually. It’s how you respond to it which, as a business we’re always keen to improve, take lessons, and share those lessons with our customers as well.”
For example, Sinara is expanding its ‘nightshift' or overnight staffing for customers to call at any hour, unlike some rivals who have opted for outsourced help centres abroad or AI-based chat boxes to cut costs.
“I think the irony will be that actually as there is more use of AI in many aspects, whether it's trading or coding, there's more value being placed on where there is a real-life human relationship and expertise,” Habibi said.
AI won't be able to capture the 'nuances' that expert humans can when responding to customers, whether in the immediate future or possibly even in the longer term, he said.
“I think many of our customers, who themselves rely on quite deep, longstanding customer relationships, recognise that value even more to a large extent. There is going to be a value in providing that real, genuine human expertise,” Adourian added.
“If something goes wrong and there's no one who really knows how that trading system works, who are you going to talk to?”
