* Last LME Week as independent exchange
* Date structure gives open-outcry the edge
* Chinese firms eye as new members
By Harpreet Bhal and Carrie Ho
LONDON/SHANGHAI, Oct 14 (Reuters) - The London Metal Exchange may be hosting the last LME Week as an independent concern but, like the tuxedos being dusted off for the annual beanfeast, other traditions may not just survive but thrive under Chinese ownership.
The ring, its gentlemanly but frantic style of dealing face-to-fingers across a circle of red leather benches, has defied the global trend away from trading pits to electronic screens and could now grow as Hong Kong Exchanges and Clearing Ltd. completes its takeover of the 135-year-old LME.
Members, who have accepted $2.2 billion to cede control of the world's main metals market, are looking at earlier hours for ring trading to grab business in Asia and there has been talk, so far denied, that Chinese smelters may be interested in taking LME membership.
The sale of the venerable exchange, which holds its annual dinner on Tuesday, prompted some to see the end of the ring, but in fact new participants seem willing to snap up available space - Jefferies Bache, the brokerage arm of U.S. investment bank Jefferies Group, threw its hat in the ring last month after France's Natixis pulled back from commodities broking.
Market participants are now speculating on whether key Chinese companies will take up the challenge of open-outcry.
Traders reckon nearly half of LME trading volumes come from Chinese customers. China's booming industry is the world's largest consumer of base metals. For example, it accounts for as much as 40 percent of global demand for copper.
At Jiangxi Copper and Minmetals, subjects of some of that speculation, sources denied either of the Chinese smelters is seeking immediate LME membership. Bank of China International declined comment on talk that it might expand its activities on the exchange to take part in ring trading.
Bank of China International Global Commodities UK Ltd was approved as a Category 2 member in April. That lets it trade on electronic and telephone markets only. However, traders said BOCI would be a likely candidate for a Category 1 ring dealing membership, once its volumes pick up.
More broadly, ring membership could appeal to Chinese smelters and other firms in the metals sector: "LME membership would be a wise move if the companies want to trade more efficiently, since Category 1 members can get a lot of useful inside information," said one Shanghai-based trader.
A source at Jiangxi Copper noted, however, that such firms faced some hurdles: "Firstly, the Chinese government will have to be on board for this idea and the approval process can take quite long for state-owned companies like us," the source said.
Facing competition from the Shanghai Futures Exchange, new owner HKEx has pledged to preserve the LME brand and open outcry - at least for the next couple of years, until January 2015.
The ring system, where traders from brokers and banks use hand signals and loud voices to deal in copper, aluminium, lead, nickel, tin and zinc from seats that form a circle around the floor retains a strong appeal for those already involved.
"I love it to bits," confessed one senior figure at Category 1 dealer. "It's got tradition; it's got history.
"It's a gentleman's market and it is transacted in a proper manner," he added.
Among the attractions of trading at Leadenhall Street in the heart of the City of London are LME contracts based on hundreds of specific forward dates, rather than on the simpler monthly deliveries used in most futures contracts.
Supporters of the ring argue that brokers dealing with each other directly, rather than over automated networks, are better able to manage the complex delivery system.
Some 80 percent of so-called "date spreads", which form a very important part of the LME's business, are still executed on the floor or over the phone, the LME says.
Tough trading in deteriorating economic conditions have forced many heavyweight commodities businesses to axe metals brokerages or shut up shop altogether, but the LME's ring has remained resilient as newcomers have replaced departing firms.
INTL FCStone picked up MF Global's ring dealing team after the U.S.-based firm filed for bankruptcy last year. And when French bank Natixis announced in May the closure of its commodities brokerage business, its ring-dealing space was taken over by Jefferies Bache.
As the world's metals trade gathers over canapes in London this week, they may take heart from the upbeat note struck in June by Jefferies Bache chief executive Richard Handler, who saw the metals sector as once with great potential: "That is definitely something that we see as an opportunity," he said.
"We see that as a global opportunity - U.S., Europe and Asia - for expansion."