(August 23): Societe Generale SA will withdraw from the public trading floor of the London Metal Exchange (LME). This move will raise new questions about the future of the legendary “ring”.

The bank’s British subsidiary will continue to serve clients as a clearing member of the exchange, but will withdraw from the trading floor from next Tuesday, August 27, the LME said in a statement to members. This leaves just seven members on the floor, following the resignations of traders such as Triland and ED&F Man in recent years.

The future of the ring has long been a topic of debate at the LME. The open trading floor, with its red leather sofas and hand-to-hand trading, is seen by some as an anachronism in a world dominated by electronic trading, and its role in setting global reference prices for the world’s major industrial metals has diminished in recent years.

While many rival exchanges closed their trading floors years ago, supporters of the ring say it remains an effective mechanism for trading the LME’s unique and complex range of daily, weekly and monthly contracts. But the ring also has its critics, including high-frequency trading firms, who argue its closure is long overdue.

The LME has announced that it will consider permanently closing the trading floor if there are fewer than six members or if the remaining members account for less than 75 percent of previous trading volumes.

“The LME confirms that none of the criteria for a ring price liquidity event have been met as a result of this announcement,” the statement said.

The roots of this historic institution go back to the early days of the British Industrial Revolution, when metal producers, consumers and traders would meet in a London coffeehouse and draw a circle in the sawdust to trade. Activity on the trading floor had been slowly declining long before the Covid-19 pandemic, and trading shifted to electronic systems and the so-called interoffice market, where deals are concluded directly between members by phone and email.

The LME was forced to close the ring during the pandemic and decided to do so permanently after the successful transition to fully electronic price setting. It was eventually reopened in a reduced capacity following an outcry from members, but trading volumes have fallen sharply since the reopening.

Societe Generale remained present long after rival banks such as JPMorgan and Barclays withdrew, and following the decision to withdraw, CCBI Global Markets is the only bank active as a ring dealing member. Other floor brokers include Amalgamated Metal Trading, Marex Group and Sucden Financial.