Hong Kong exchange confirms LME move

HKEx, the world’s number two listed stock exchange by market value, is vying with CME Group, NYSE Euronext and InterContinental Exchange to buy LME, sources said.

“The board confirms HKEx continues to participate in that process and understands it is one of a number of interested parties studying this opportunity,” Hong Kong Exchanges and Clearing said in a statement.

LME, which handles about 80 per cent of global futures trading in industrial metals, will be a prized asset for HKEx having made its ambitions clear to ramp up in commodities.

That push into commodities trading is driven by CEO Charles Li and head of market development Romnesh Lamba, both ex-investment bankers.

But HKEx sat on the sidelines during last year’s wave of stock exchange consolidation and instead focused on forming alliances with its neighbouring Shanghai and Shenzhen stock exchang- es.

HKEx, which has a market value of about $17.1bn, is well funded and has zero debt.

It sits on cash and short-term investments of around $3.9bn as of end-2011, Thomson Reuters data show, though it has limited ability to dip into its cash reserves for acquisitions as it has to maintain a capital buffer to meet counterparty risks involved with running a clearing house.