By Lawrence White
HONG KONG Aug 15 (Reuters) - Hong Kong Exchanges and
Clearing Ltd (HKEx) is close to picking a new CEO for
the London Metal Exchange and will make an announcement in due
course, Chief Executive Charles Li said on Thursday.
HKEx, which bought the LME last year, has narrowed the field
to three contenders for the chief executive post when Martin
Abbott leaves at the end of this year.
The exchange is choosing from among its chief operating
officer, Diarmuid O'Hegarty, Garry Jones, a former CEO of NYSE
Liffe, and Martin Pratt, chief operating officer at metals
trader Triland, market sources have said.
As for litigation related to the LME's warehousing business,
Li said it was unclear how long it would last or how much it
The LME has been named in several class action lawsuits
accusing banks and large commodity traders of hoarding metal in
warehouses and driving up the prices of industrial products.
"We do not have sufficient information to determine how long
it will last or what the costs will be, but it's clear in our
mind that this litigation is baseless," Li told reporters at a
press conference in Hong Kong.
He also said that he believed in the LME warehouse system,
but that the exchange was open to change.
"We fundamentally believe in the warehouse system which has
developed over years. But if the market believes there are ways
we can change, we will consider them," Li said.
A final decision on whether to implement the changes is
expected to be made at a scheduled LME board meeting in October.
If the proposal is adopted, the new rules would come into force
on April 1 next year.
HKEx said earlier on Thursday that profit from its LME
business came to HK$267 million ($34 million) for the first half
of 2013, driven by a hike in trading fees as the LME moves to
commercialise its business model.
Last year, the LME made a HK$29 million ($3.7 million) core
loss due to management payouts and other costs related to the
sale, while its group revenue and other income was HK$976
million for 2012.
HKEx said the major sources of revenue from the LME were
trading fees, commodity market data fees and other ancillary
fees. It has vowed to freeze the LME fee structure until the
start of 2015, but is widely expected to raise fees for trading,
and clearing after that.
The LME's market data fees contributed HK$88 million ($11
million) while commodities stock levies and warehouse listing
fees contributed HK$60 million ($7.7 million).
Overall, HKEx's second-quarter net profit rose 9 percent,
driven by higher trading volumes and a pick-up in initial public