When Hong Kong Exchanges & Clearing (HKEX) bought the London Metal Exchange five years ago, one of the most attractive parts of its offer was its strong connection with China.
As well as higher liquidity from Chinese participants, exchange members anticipated a smoother path to the LME establishing registered warehouses in the country.
But while HKEX has not stopped lobbying Beijing on the point and has publically expressed its willingness to co-operate with domestic commodity exchanges to ensure a level playing field, it has foundered.
This is not only because of a sense of unwillingness from its Chinese peers but also because of Beijing’s retention of strict controls over currency exchange and warehousing.
Although the LME is the most traded platform for...