Hong Kong 14/06/2016 - (Add more quotes from Li)
The Hong Kong Exchange and Clearing (HKEX) is not looking to change the ‘DNA’ of the London Metal Exchange even as it looks to financialise the LME, said Charles Li, chief executive of HKEX at LME Week Asia in Hong Kong.
“Financialisation, many of you have issues with that…Sometimes people get nervous with this,” Li said in a speech.
“We are against changing the LME’s DNA. We bought the LME because it’s in the physical OTC market, and has roots in the physical markets. We want to financialise the LME without losing core membership. The Chinese have a special feeling for the LME, a feeling for over 20 years. We are not trying to change that,” he said.
“We want to get more pple who don’t trade lme today to trade with us, or trade with our members, as long as that does not take members’ volumes away,” he added.
But Li assured that the HKEX is not looking to make the LME a financial exchange.
“Financial investors are lacking in the LME universe. The LME’s DNA is deeply rooted in the physical part of the service. [But] we bought lme not to make it a financial exchange,” he said.
“We do not believe we have to change physical nature of the market…We have to find the right balance. We should be able to do that. We are not interested fully financialising the LME.”
Li added that currently in China there are many commodity exchanges which are financial in nature.
"They are largely traded by people who don’t use physical settlement. They discourage physical settlement, which is the opposite of the LME.”
HKEX had published its 2016-2018 strategic report in January, where it said it wants to financialise the LME. It wants a higher level of participation by Asia financial investors, particularly from China, in the LME via a London-Hong Kong Connect.