The London Metal Exchange and its users will need to take “uncomfortable” steps in order to modernize more quickly, according to Apurv Bagri, a senior adviser to the LME’s owner, Hong Kong Exchanges and Clearing.

Modernizing the exchange will be crucial to its long-term future, and the LME and its users should consider “controversial” steps to ensure it can remain profitable, said Bagri, speaking at the LME’s annual dinner.

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Those steps could include cross-listing of the LME’s contracts with other exchanges, and an expansion into other geographies, suggested Bagri, a veteran of the metals industry who served on the HKEX board for ten years until his retirement in April. He remains chairman of its global commodities unit.

“Do we truly believe that the city of London will forever be the gravitational center of metals?” he asked attendees at the black-tie dinner in London. “Or should we be asking hard questions around what our customers need and where they need it?"

The LME has been pushing to overhaul its market in the wake of a short squeeze in the nickel market in 2022, which resulted in a rare regulatory censure and legal claims from investors. But Bagri called on the LME to accelerate that process.

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“All of us must embrace change,” he said. “We will need to take steps even when they are uncomfortable to increase the pace of modernization.”

The LME’s regulatory burden has increased in the wake of the nickel crisis and it is facing rising costs and competition from rival exchanges, he said. In that environment, the LME “must provide the right platform at the right price, and it must do so in the right jurisdiction,” he said.

“At the same time, it must achieve a return commensurate with the risk it carries and with the costs that it incurs.”