Societe Generale International has announced its decision to withdraw from the London Metal Exchange (LME) open-outcry trading floor, known as the “Ring.” This move has raised concerns about the future viability of this historic trading venue. The LME, the world’s oldest and largest market for industrial metals, confirmed the news on August 23, 2024.

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Following this departure, only seven members remain active in the LME ring, a significant drop from membership’s peak in the late 1980s when it was at around 30. Known for its iconic circle of padded red leather seats, the ring has long been a meeting place for traders who trade key metals such as copper, aluminium, zinc, lead, nickel and tin in intense five-minute sessions using traditional hand signals.

Daily prices on the LME trading floor serve as a global benchmark for metal producers and consumers in their physical delivery contracts. However, the steady decline in membership numbers is casting a shadow over the future of the ring, the last remaining open trading venue in Europe.

According to an official statement from the LME, Societe Generale will give up its status as a ring dealing member and move from a Category 1 member to a Category 2 member, effective August 27. This change reflects the general trend of electronic trading increasingly dominating the market and challenging the relevance of traditional trading practices in a rapidly evolving financial landscape.

Category 2 members can trade on their own accounts and on behalf of clients through the LME’s electronic system and are also members of the LME’s clearing house. Societe Generale declined to comment, but a source close to the bank indicated that there would be no changes to the way metals clients are served.

Two years ago, the LME lost ED&F Man Capital Markets as a ring dealing member after it was acquired by fellow member Marex. In 2021, the LME announced that the ring could be dissolved if the number of Category 1 members falls below six or their trading in the second ring falls to less than 75 percent of the previous year’s volume. Official price formation would then be fully switched to the electronic system.

The London Metal Exchange stated: “The LME confirms that none of these criteria for ring price liquidity events have been met by this announcement.”