Hong Kong stock exchange in official talks for metals warehousing in China: CEO

[HONG KONG] Hong Kong stock exchange's chief executive Charles Li said on Tuesday that the bourse was in official talks with Guangdong authorities on metals warehousing, a major step towards its long-held aim of setting up warehouses in mainland China.

Li, head of Hong Kong Exchanges and Clearing (HKEX), has long wished for a China foothold to expand its London Metal Exchange (LME) franchise, but has faced reluctance from Chinese regulators concerned with protecting emerging local exchanges in the world's biggest consumer of metals.

"We have been talking about LME warehousing in China, it's not going to be an easy subject," said Mr Li, speaking at an event in Hong Kong. "We are working with the Guandong government (to see) if we can experiment a pilot scheme for warehousing."

Warehouses are a critical part of the LME's price-setting function because they act as a market of last resort; a buyer for sellers in need; and a store of metal for those who need to purchase, a mechanism that roots exchange prices in the physical market.

The bourse still requires consent from regulators to go ahead with the pilot plan, Mr Li added.

REUTERS