REFILE-LME WEEK-LME launches new collaboration with Shanghai Futures Exchange
(Refiles OCT 10 story to fix spelling of "LME" in paragraph 1)
By Polina Devitt and Eric Onstad
LONDON, Oct 10 (Reuters) - The London Metal Exchange (LME) has launched a new collaboration on product development with its Chinese rival, the Shanghai Futures Exchange (ShFE), LME Chief Executive Matthew Chamberlain said on Tuesday.
The announcement came after news last month that ShFE was looking into the possible launch of a nickel futures contract for international use.
The LME, owned by Hong Kong Exchanges and Clearing (HKEX) , is the world's largest and oldest metals forum.
"Today our two venues have opened a new chapter of close cooperation and we intend to further deepen our collaboration in 2024," Chamberlain told the LME dinner, part of the annual LME Week industry gathering in London.
"We will work together in product innovation to better serve international participants in risk management and price discovery," he added, giving no further details.
Last month, sources told Reuters that ShFE had been studying the structure of the nickel market and considering a new contract at the instigation of industry participants looking for alternatives to the LME contract.
ShFE was consulting with the industry and no final decisions had been made on when a nickel futures contract might be launched, which would be on ShFE’s International Energy Exchange (INE), the sources said.
The LME has been grappling with a lawsuit and reduced nickel trading volumes after a wild spike in prices in March last year when nickel prices doubled in a matter of hours.
The 146-year-old LME was forced to halt nickel trading and cancel deals after volatility caused partly by large over-the-counter short nickel positions.
"In the metals industry, the spotlight is on the world of OTC contracts, a world that is largely hidden from view," LME interim Chairman John Williamson told the LME dinner.
"We must now think collectively and carefully about the role of OTC markets in our market and what that means for the LME."
ShFE was also looking to expand its warehousing network outside of China, sources told Reuters in July. (Reporting by Polina Devitt and Eric Onstad; Editing by Jonathan Oatis and Leslie Adler)
