The London Metal Exchange (LME) has been rocked by the departure of Société Generale (GLE) from its famed open-outcry trading floor known among commodities traders as the “Ring.”
The Paris-based bank said that it will exit the open pit trading floor on Aug. 27, though it will still
serve clients as a clearing member of the London Metal Exchange.
Société Generale’s exit is a blow to the exchange, which now has only seven members remaining in the Ring, throwing its future as one of the last remaining open-outcry trading floors into doubt.
The Ring, with its distinctive red couches arranged in a circle and hand-signal trades, is viewed by some as a throwback in an age when commodities trading is done electronically.
However, the Ring has operated largely as it is today ever since the London Metal Exchange opened back in 1877. It is the only remaining open-outcry trading pit in Europe and is viewed by many traders as a tradition filled with nostalgia.
From the Ring, traders have set global benchmark prices for industrial metals such as copper, zinc and aluminum for nearly 150 years.
The Ring began during England’s industrial revolution when metals producers and merchants would meet in London coffee houses and draw a circle in the sawdust to trade metals and set prices.
Advocates for the Ring claim that it remains an effective mechanism for trading the London Metal Exchange’s complex contracts and continues to serve a purpose.
However, that hasn’t stopped a growing number of members such as Société Generale from pulling out of the open-outcry trading floor, particularly after the Covid-19 pandemic forced the Ring to temporarily close in 2020.
Others who have left the Ring include banks %JPMorganChase (NYSE: $JPM) and %Barclays (NYSE: $BCS).
The London Metal Exchange has said that it will consider closing the Ring permanently if there are fewer than six members, or if remaining members account for less than 75% of historic trading volumes.
