The UK's Office of Fair Trading (OFT) has ordered the London Metal Exchange (LME), the world's leading metals contracts trading bourse, to shelve plans for extended trading hours while the Office investigates whether the move would stifle competition from rival trading platforms.
The OFT's probe comes in response to a request from Spectron Group Plc, which operates an electronic market place for LME members to trade futures and options.
Spectron fears that if LME extends the operating hours of its own trading platform LME Select, this would force Spectron's eMetal electronic trading platform, which currently competes with LME Select, to exit the market.
LME Select currently operates from 07:00 to 19:00 London time but, responding to requests from its members, LME wanted to extend those hours to 01:00 to 19:00.
In a statement, the OFT expressed the view that it would be "very difficult" for Spectron to re-enter the market as a competitor in the future if the LME goes ahead with the move. It also believes that the extension to LME Select's hours could increase the obstacles to effective entry into the market by other potential competitors to LME.
"We believe it is necessary to make this interim direction to protect the public interest in maintaining as competitive a market as possible," stated John Fingleton, OFT Chief Executive.
"In addition, unless the OFT grants the interim measures direction, it is likely that serious and irreparable damage to Spectron, and especially its reputation, will arise that cannot likely be subsequently remedied," he added.
The OFT first received a complaint from Spectron on 1 July 2003 that the operation of LME Select by the Exchange was anti-competitive. The OFT has been conducting an investigation into the basis upon which the Exchange operates LME Select since then.
LME will not be able to implement this extension, originally scheduled to launch on March 1, 2006, before the OFT has completed its investigation.
The LME stated that it is "strenuously defending" its position.
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