The London Metal Exchange (LME) is one of the largest exchange markets for industrial metals in the world; more than three quarters of non-ferrous metals are traded on the LME, with the total value of trade reaching $14.6 billion (in 2013). Owned by the Hong Kong Exchanges & Clearing Limited since the late 2012, the LME trades only with industrial metals. Precious metals such as gold and silver are traded on the London Bullion Market.
History of the LME dates back to the early 1570s when the Royal Exchange was founded. The commodities that were traded on the Royal Exchange also included metals. Initially, only physical metals were traded. And for the needs of domestic industry/market only. However, following Britain’s emergence as one of the leading metal exporters, domestic metal traders were soon joined by their colleagues from other parts of Europe.
By the 19th century, the Royal Exchange became so crowded by various traders, businessmen and financiers that it became extremely difficult to do business. Many groups thus moved out of the Royal Exchange and started trading at the nearby coffee houses. Metal traders chose the Jerusalem Coffee House in what is today the so-called Exchange Alley. And it was here where the Ring was “invented”. The seller who wanted to sell metals drew a circle on the floor and shouted “Change”. Those interested in buying would then bid standing around the circle.
What is today known as the London Metal Exchange was founded in 1877 as the London Metals and Mining Company which was initially headquartered in Lombard Court. Due to the rapid growth of members, however, it soon moved to a newly constructed building in Whittington Avenue which served as its seat for almost 100 years. The LME was then briefly housed in a building in Fenchurch Street until finally moving to its current headquarters in Leadenhall Street in the mid-1990s.
In addition to adapting to changes in the metal market by moving/constructing suitable buildings, the LME also had to adapt to a number of other changes such as innovations in the information/telecommunication technology and in the actual metal trading, most notably the demand for new metals. Unlike copper and tin which have been traded with even before the LME was officially founded, zinc and lead were added only in the 1920s, while aluminium wasn’t traded on the LME until the late 1970s.