Ring

The Ring is a unique trading floor design used by the London Metal Exchange (LME) and some other commodity exchanges for open outcry trading. It consists of a circular arrangement of seats where traders conduct face-to-face negotiations to buy and sell commodities.
== History and Design ==
The Ring trading system originated in the early 19th century when traders would gather around a circular counter or "ring" to conduct business. At the LME, the modern Ring is a 6-meter wide circular trading area with tiered red leather seats facing inwards. Only Ring-dealing members are permitted to trade within this space.
=== New Ring===
The London Metal Exchange (LME) in 2016 unveiled a newly built Ring, the open-outcry trading floor, after relocating to Finsbury Square in London. This marked the Ring's fifth relocation since its establishment above a hat shop in Lombard Court in 1877. The latest move was part of the exchange's modernization efforts following its acquisition by HKEX in 2012. The new facility integrated electronic wall boards to align electronic and open-outcry pricing, supported by a £1 million investment in technology. The traditional circle of red leather seats were maintained, with the former seats sold to benefit Little Havens Hospice.
== Trading Process ==
Trading in the Ring occurs in five-minute intervals known as "rings" for each of the LME's main metals. During these sessions, traders use hand signals and shout to indicate their buy and sell orders. This open outcry method allows for rapid price discovery and liquidity.
The official LME prices, which are used as global reference prices for physical contracts, are determined during the second ring sessions in the morning (for cash and three-month prices) and afternoon (for three-month prices only). Copper and tin have been traded on the London Metal Exchange (LME) since 1877, followed by lead in 1903, zinc in 1915, primary aluminum in 1978, and nickel in 1979. Contracts for two grades of recycled primary aluminum alloy were introduced in 1992 and 2002.
== Significance ==
The Ring plays a crucial role in establishing benchmark prices for industrial metals traded on the LME. These official prices are used worldwide as reference points for physical contracts and financial instruments.
While electronic trading has become dominant in most exchanges, the LME has maintained the Ring alongside its electronic platform LMEselect. The exchange argues that the Ring provides unique benefits in terms of transparency and price discovery, especially for more complex trades.
== Other Exchanges ==
While the LME's Ring is the most well-known, similar open outcry trading floors have been used by other commodity exchanges. However, many have transitioned to fully electronic trading in recent years.
== Challenges and Future ==
The Ring faced temporary closure during the COVID-19 pandemic, leading to debates about its continued relevance. In 2021, the LME proposed closing the Ring permanently but ultimately decided to reopen it after resistance from members. The future of open outcry trading remains a topic of discussion in the commodities trading industry.
== References ==
Category:Commodity Exchanges
Category:London Metal Exchange
Category:Financial Markets
Category:Trading Floors
Category:Open Outcry