London Metal Exchange resumes trading after five hours of blackout

The London Metal Exchange said electronic trading had returned to normal after more than five hours of disruption to the world's largest base metals exchange due to a power outage in a third-party data centre.

The market was scheduled to open at 1am London time but finally resumed at 06:15 after the exchange moved its systems to a backup data centre. Traders can still trade over the phone during power outages, according to a person familiar with the matter-LME has a large telephone market and is popular with banks, brokerages and institutional customers who need to make large and complex transactions.

Although electronic trading accounts for only about 1/3 of LME's total trading volume, traders rely on this part of the market for real-time quotes. The electronic platform is also used to set daily closing prices, although Monday night's interruption began about an hour after the pricing window closed.

It was a difficult time for LME's power outages, which set global prices for leading commodities such as copper and aluminium, trading about $64 billion a day in futures contracts. Relations with some of its biggest brokers have been strained by the debate over whether to close the historic public outcry trading floor. The exchange also faces falling trading volumes, which fell to their lowest level in more than a decade despite the surge in metal prices.

According to the person, traders were able to trade over the phone during the interruption because LME's deal matching engine was hosted on different websites. However, while LME's electronic system is up and running as the European trading day approaches, some third-party software platforms are still recalibrating their systems to resolve the problem of switching to backup sites, the person said.

The origin of LME can be traced back to the 19th century and launched its LMESelect electronic trading platform in 2001. Although the public outcry hall still exists, its role further diminished last year as part of the compromise that kept it open.

The exchange has been shut down unexpectedly in the past due to problems such as connectivity problems with external network providers. It had two major disruptions in the six months of 2016 and 2017, prompting traders to respond to price movements on rival exchanges over the phone.

The power outage put an end to 12 tumultuous months in LME. Six months after LME announced its proposal, the plan to permanently close the Ring was cancelled in June after strong opposition from major users. However, floor trading volumes fell sharply last year from pre-pandemic levels, prompting questions about its future.

In October, the exchange was forced to step in to restore order in the copper market-investigating trading and making emergency rule changes-after withdrawing metal orders pushed inventories to dangerously low levels and triggered sharp price fluctuations.