* Fresh blood and IT nous needed for LME - industry sources
* LME still dominates trading of metals such as copper
* Liquidity not wedded to any exchange
By Pratima Desai
LONDON, Feb 10 - Acting head Matt Chamberlain is fast
emerging as the frontrunner to permanently take the reins at the
London Metal Exchange, with industry insiders saying he has the
skills, experience and knowledge to resolve a conflict with
members and grow volumes.
Sources close to the matter say Chamberlain is interested in
the job, having stepped in temporarily following the abrupt
departure of Garry Jones last month after three years at the
helm of the world's largest and oldest metals market.
Chamberlain is also highly regarded by Charles Li, chief
executive of parent company Hong Kong Exchanges & Clearing
, having advised on the $2.2 billion takeover of the
140-year old LME in 2012 while at UBS, sources say.
"Matt carries no baggage, he can communicate and respects
the history of the exchange," one head of a commodity brokerage
said, declining to be named. "Matt can build bridges between all
the people who use the exchange directly or indirectly."
That crucial skill was honed when Chamberlain, previously
head of business development, led the process of reforming the
exchange's network of warehouses to cut long queues for metal
waiting to leave to appease consumers and regulators.
The experience of bringing together a disparate group of
people with different priorities has equipped 34-year old to
resolve tensions with members created by the exchange courting
high-volume funds, industry insiders said.
"They need fresh blood, someone with IT nous who is hungry,
someone who has vision and a strategy. Matt is already in situ,"
a source at a commodity trading firm said.
"He understands the needs of all stakeholders and that the
exchange needs to evolve to survive in the 21st century and that
means more funds on the exchange, adding liquidity and volumes."
The LME still dominates the trading of metals such as
aluminium, copper and zinc. That is unlikely to change in the
However, incursions into its territory from rivals such as
the Shanghai Futures Exchange (ShFE) and CME Group have
seen the LME's share of overall copper trading fall to near 60
percent from 80 percent in 2008, while for all metal traded on
exchanges the numbers are 71 and 87 percent respectively.
"Liquidity is not wedded to any exchange, business
development is key," a copper consumer said, adding his company
was using the CME more.
The exchange's quest to attract high-volume funds and
high-frequency traders (HFT) to boost liquidity has antagonised
some core broking members which service consumers and producers
and are already under pressure from higher fees.
Their complaint about the use of super-fast computers to
place large numbers of orders at lightning speed, was echoed by
Michael Farmer, founding partner of commodities investment firm
Red Kite Group in his speech during LME Week.
"High-frequency trading appears to have no other purpose
than to make money from the trading of other participants by
jumping ahead of them," Farmer said. "This does appear to me to
be an unfair advantage and could be described as front running."
Front running, which is illegal, is where brokers or traders
places their own orders in front of those from incoming clients
that are expected to impact the price.
(Additional reporting by Peter Hobson; Editing by Veronica
Brown and Mark Potter)