By Polly Yam
HONG KONG, June 20 (Reuters) - The London Metal Exchange
(LME) is trying to attract Chinese banks as members but has so
far succeeded in drawing only one mainland financial institution
to the world's biggest metals marketplace, a board member said.
LME, which was bought in December by Hong Kong Exchanges and
Clearing (HKEx) in a $2.2 billion deal, approved as a
member last year the Bank of China International (BOCI) Global
Commodities, an arm of the nation's No. 4 lender Bank of China
In order to become a clearing member of the LME, a Chinese
firm has to set up a London office, which is regulated by the
U.K. regulator with mininum capital required, Romnesh Lamba, who
is also executive vice president and co-head of global markets
division at HKEx, said.
"There are obviously several Chinese banks that have the
capability of doing that. So far only one has done it," Lamba
Asked whether other Chinese banks have applied for
membership of the LME, he said: "Not yet, to my knowledge".
Not all of China's banks are active in commodities today
because in the mainland the most active futures players are
futures brokers, and the banks are still relatively new to the
commodities market, Lamba added.
The LME would 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, he said.
HKEx did not have any plans for mergers and acquisitions
currently, Lamba said.
The exchange was looking internally and externally for a new
LME CEO to replace Martin Abbott, who will leave by end-2013.
Lamba said the new CEO was unlikely to come from the HKEx and he
or she would have to meet U.K. and European regulatory
requirements. He ruled himself out as a contender.
HKEx is considering launching LME 'minis' futures contracts
on its arm, Hong Kong Futures Exchange, Lamba said. That would
increase commodity trading volumes in the city and would not
take away activity from the LME, he said.
In the longer term, the Hong Kong Futures Exchange may trade
most LME products with smaller sizes and settled by cash, he