I'm LongbridgeAI, I can summarize articles.On Monday, electronic trading for all contracts on the London Metal Exchange (LME) was suspended for more than two hours and has now resumed. After trading resumed, there was no significant fluctuation in market prices. Copper prices rose by 0.9%, aluminum prices fell by 1.2%, and overall levels were largely consistent with those before the suspension. This malfunction occurred at a critical time for the metal market—on the third Wednesday of the month, which is the peak liquidity period for LME contracts
On Monday, electronic trading for all contracts on the London Metal Exchange (LME) was suspended for more than two hours. During the downtime, traders across multiple markets, from aluminum to zinc, were unable to place orders and could only wait for further clarification from the exchange regarding the cause of the system failure.
This outage occurred at a critical time for the metal market—just before the third Wednesday of the month, which is when LME contracts see the highest liquidity. Meanwhile, the war in Iran is also severely impacting commodity prices.
After trading resumed, an LME spokesperson stated that the interruption was due to issues with the exchange's main electronic matching engine.
In recent months, the metal market has experienced multiple trading system failures. On January 30 of this year, the opening of LME trading was delayed by an hour; meanwhile, competitor exchange operator CME Group also faced a trading halt of up to 10 hours last November, disrupting global markets. Additionally, in January of this year, during a period of severe market volatility, CME's natural gas market experienced a trading interruption lasting two minutes.
LME launched a new trading platform in March of last year as part of a large-scale technology upgrade, aimed in part at enhancing electronic trading capabilities. Unlike other exchanges, LME still conducts a significant amount of trading via phone and electronic messages. However, following the nickel crisis in 2022, LME has been pushing for more trading to shift to electronic platforms.
Trading was suspended at 2:44 PM London time and resumed at 5:30 PM. During the downtime, the LME spokesperson indicated that the exchange was aware of the system issues and was working to resolve them as quickly as possible, but the problems could not be fixed before the closing pricing window from 4 PM to 5 PM London time, leading to an unavoidable "pricing interruption event."
The spokesperson noted that the electronic market was in a "technical pause," but over-the-counter transactions between brokers could still continue via phone and electronic messages.
LME plans to restore electronic trading through backup servers after the closing pricing window ends. The closing price will be calculated according to the exchange's "backup pricing waterfall approach."
According to the method published by LME, this mechanism will reference the most recent transaction prices on the electronic platform as well as buy and sell quote information in the market. Data from Bloomberg shows that during the downtime, some of the most actively traded LME contracts still had buy and sell quotes in the broker office trading market.
After trading resumed, there was no significant fluctuation in market prices. Copper prices rose by 0.9%, aluminum prices fell by 1.2%, and overall levels were largely consistent with those before the suspension.