H.K. Should End Bourse Monopoly If LME Won, Rival Says (Update 1) By Eleni Himaras - May 17, 2012 12:00 PM ET Hong Kong Exchanges & Clearing Ltd., one of three remaining bidders for the London Metal Exchange, should lose government protections against competition if it begins commodities trading, Hong Kong Mercantile Exchange Chief Operating Officer William Barkshire said. Hong Kong Exchanges, Intercontinental Exchange Inc. and CME Group Inc. are the remaining contenders for the LME, which handles more than 80 percent of global metals futures, after NYSE Euronext, the biggest U.S. exchange owner, was removed from the bidding. The Chinese bourse was overtaken as the worldâs largest market company by CME Group this year and is seeking to broaden its business as the pipeline of large initial public offerings from the mainland slows. âIn the event that HKEx competes with others in commodities and other asset classes either via the potential acquisition of the LME or organic growth, it is only right that as a condition the authorities should remove its favored nation status,â said Barkshire, who was previously director of strategy at the London Stock Exchange. No other bourses or alternative venues may compete with Hong Kongâs main public exchange without government approval, according to the cityâs Securities and Futures Ordinance. The only approved equity platforms have been so-called dark pools, trading venues that donât display prices and in Hong Kong exclude retail investors. The ordinance identifies the bourse operator by name and prohibits others from operating a stock exchange that allows the public to trade unless it is either the main bourse or controlled by the main bourse. Hong Kong Exchanges operates the cityâs only retail share market, its equity futures venue and the clearing company. Definitions The Securities and Futures Ordinance doesnât prevent others from offering securities trading, said Scott Sapp, a spokesman for Hong Kong Exchanges. âIn principle, HKEx welcomes competition as long as there is a level playing field,â he said. The Hong Kong Mercantile Exchange began trading gold futures last May and silver contracts in July, both denominated in U.S. dollars. Those are the only contracts available. It said in March that itâs planning to offer gold, silver and copper futures contracts denominated in Chinaâs yuan. Industrial & Commercial Bank of China Ltd., the worldâs largest lender by market value, bought a 10 percent stake in the Hong Kong Mercantile Exchange in December. âHKEx effectively derives monopoly rents from the market, for example via requirements to report transactions and use it as a clearing and settlement venue,â Barkshire said. âThis underpins its significant profit margins and current high market capitalization.â Most Profitable Last year, the exchangeâs profit margin was 74 percent, the highest of any bourse, according to data compiled by Bloomberg. Bolsa de Valores de Lima SA and ASX Ltd. are tied as the second most profitable with 58 percent profit margins last year. âCompetition under the right conditions is good for all market users in terms of costs, service levels and innovation,â Barkshire said. âThis should also include both the listing and trading function of exchanges as is the case in other financial centers which seek to compete globally.â http://www.bloomberg.com/news/2012-05-17/h-k-should-end-bourse-monopoly-if-lme-won-says-rival.html
I was really hoping it would have gone to Globex. http://www.bloomberg.com/news/2012-05-22/two-parties-left-in-race-for-lme-as-cme-said-removed.html