Stand-up traders fined for bending LME rules

                                The London Metal Exchange (LME) has fined almost all of the dealers buying and selling copper on its open-outcry floor a total of £13,750 and suspended one for standing up during a session.

Seven traders were fined £1,250 each for breaking a rule that states dealers must remain seated at all times while dealing on the LME floor, known as the ring, the bourse said in a notice dated last Friday.

Two traders were each given £2,500 fines because it was their second offence in three to six months, according to the notice.

There were 11 LME floor-trading companies when the rule was broken on July 11.

The LME, which accounts for more than 80% of industrial-metals futures trading, operates Europe’s last open-outcry floor. Ten companies are entitled to trade in the ring, where dealers sit on red leather sofas in a circle measuring 6m in diameter.

On the New York Mercantile Exchange, traders are in a pit with steps that allow them to see above each other. "The LME operates a ring, not a pit," Kathy Alys, an LME spokeswoman, said.

"Dealers that stand create an unfair advantage and might obstruct the view of other dealers and LME pricing committee members."

LME open outcry dates back to the 1800s, when merchants drew a circle in sawdust to trade tin and copper. While traders no longer wear top hats and tails, they still must comply with a formal dress code and rules, including buttoned shirts and a chewing gum ban. Breaches bring fines and penalty points, the accumulation of which results in temporary suspension.

The seven traders committing first offences were also given 20 disciplinary points apiece.

The two repeat offenders each received 40 points, and one of them was suspended because he had accumulated 60 points within three months.

Trading in the ring might be "unmanageable" and monitoring of trades more difficult when traders stood up, said Paddy Crabbe, a consultant and author of the Metals Trading Handbook. - bdlive