Amid need for continuity, industry lauds LME chief’s decision to stay

By Eric Onstad and Pratima Desai

LONDON (Reuters) -London Metal Exchange Chief Executive Matt Chamberlain’s decision to remain in his post and not leave at the end of April is welcome as the exchange needs experienced hands to steer it through a challenging time, industry sources said.

But the departure of Adrian Farnham, chief executive of the exchange’s clearing house is surprising, sources say, given the Bank of England investigation after the LME suspended nickel trading on March 8 when the market became disorderly.

The world’s largest and oldest forum for trading metals was also forced to cancel trades after prices doubled to more than $100,000 per tonne in a surge sources blamed on short covering by one of the world’s top producers.

The UK Financial Conduct Authority (FCA) and the Bank of England on April 4 launched a sweeping probe into the nickel crisis, which damaged the reputation of the exchange used by producers and consumer around the world.

“Given the regulatory reviews, the FCA probably said to Matt that he couldn’t go until things are sorted out. Finding a suitable replacement would have been challenging,” a metal industry source said.

“It’s a good thing he is staying. I was expecting it. The experience of the events over the last couple of months will enable him to be a stronger leader for us.”

The FCA declined to comment on whether it had been involved in Chamberlain’s decision to stay.

Chamberlain was due to join a cryptocurrency firm and Farnham was due to take over as interim CEO during the search for a permanent replacement.

“The exchange needs the continuity in this very difficult period,” a second industry source said.

Both have been at the 145-year old exchange for nine years.

The exchange said on Wednesday that Chamberlain’s decision allowed Farnham — who had deferred retirement to act as interim chief executive while the LME and parent Hong Kong Exchanges and Clearing looked for a successor — to step down.

“Nobody seems to know that Adrian had deferred retirement. This decision seems very abrupt, it’s a strange time to go. There is a lot going on in the clearing world, margins are being hiked across commodities,” a third industry source said.

“July is only around the corner, will the Bank of England investigation be completed by then?”

The LME recently hiked the initial margin requirements, the percentage of a security’s price that buyers and sellers must cover with cash or collateral when buying futures, for some of its metals including nickel, aluminium and tin.

Other exchanges where commodities are traded, such as Intercontinental Exchange and the Shanghai Futures Exchange, have also raised margin requirements.

(Reporting by Eric Onstad, Editing by Louise Heavens and Bernadette Baum)