Chinese broker applies to trade on LME floor
By Maytaal Angel
LONDON (Reuters) - A unit of one China's top securities brokers has applied to trade on the floor of the London Metal Exchange in the latest move by Chinese institutions to expand into global natural resource markets.
The move comes as western banks that trade raw materials face increased regulatory and political pressure, allowing Chinese firms to expand in the space. It is also a boon for the LME.
The exchange, which has one of the world's last open outcry trading floors, confirmed it has received the application by GF Financial Markets Ltd, a unit of China's Shenzhen-listed GF Securities <000776.SZ>.
If the application is successful, GF Financial Markets will become the first Chinese broker to trade on the LME floor, bringing the total number of floor members back up to 11.
"I think this is good thing for everyone on the floor. We are also hearing that regulators are looking favourably on the floor as a more transparent means of price discovery," said a category 1 LME broker.
In November, Jefferies Bache Ltd said it will leave the LME's open outcry floor, downgrading its exchange membership status amid a tough time for metals brokers battling with lower prices and higher fees.
The LME was bought in December by Hong Kong Exchanges and Clearing (HKEx) <0388.HK> in a $2.2 billion deal, with the new owner guaranteeing floor trading will remain in place until January 2015.
In August, GF Securities bought the commodities brokerage unit of Natixis , which was itself a former ring dealing member of the LME, until the French bank wound up its commodities broking unit last year.
The LME will have the capability to accept the Chinese yuan to clear its dollar-denominated contracts after its own clearing system is launched next year, which could attract more volumes from the Chinese.
(Reporting by Maytaal Angel; Editing by Louise Heavens)
