Buzzing outside, isn't it? Yeah, we are really excited, got about
four people out there, we've got fifteen hundred people coming to our dinner
tonight, so it really feels like Hong Kong is back in business and it's great
to be part of that business. So.
So from an LME perspective, we're reasonably optimistic.
April was a good volume month for us, putting best volume month for well over
a year. And I think more broadly talking to
delegates outside. There's a lot of interest in base
metals. People still trying to figure out where
it's going to go. These macro economic geopolitical
questions which would weigh on both side of pricing.
But in many, many ways that's a good place to be because it means people want
to hedge, they want to express an opinion.
And that's obviously all great for the exchange and our community.
Right. And just since you mentioned it, Asia
hours are back, obviously. Right.
What type of what sort of volumes are you seeing there?
Yes. So this is Nicole Nickel for for our
other metals. We've had these hours continuously.
But twenty seventh of March, we reopened.
Asia now is trading for nickel after the NIKKEI events of March last year.
We're really pleased about that. Yeah, it's just nice to wake up in
London, turn on my turn on my screen and see Ben.
Five hundred six hundred, lots of nickel traded.
And I think that that's really indicative of how important this time
zone, this geography is to our contracts.
And we're really pleased about that. And actually, if I look at NIKKEI
generally, April, which is our first month with the Asian hours reopened,
volume full full month, outright volumes up near 10 percent on the prior month,
up to 60 percent on the prior year. Obviously, that was just after just
after the events of March. But it feels to me like we're building
back what was proven. Demick is ours.
NIKKEI. Just for context, I guess it's 50 under
600. Yeah.
So you'd normally see over a thousand pre-cut pre pandemic.
So you're not. Not back.
Not back there yet and not back yet with the entire contract.
But it says it's this process of rebuilding trust.
Well, I was going to get to that reputation.
Do you think you've managed to salvage that completely?
Well, that's an abstract concept, obviously.
Where are you in that conversation? We're very conscious that that trust is
something that takes a long time to build or to to rebuild.
But I would like to think that our market believes we're doing the right
things here. So, for example, the immediate steps
that we took when we reopened NIKKEI trading last year, be that the daily
price limits be that the RTS position disclosure so that we the exchange can
have a better view of risk so that we can be more confident that the events
that we saw last year couldn't happen again through to the commissioning of
all of Wyman to do this comprehensive piece of work.
And then the action plan that we published back back in March of this
year, which really committed to a very aggressive two year program of market
improvement and all that. And then whether we can deliver on that,
and I'm confident that we can. So your trust trust doesn't arise
overnight, but I really hope people feel that we are doing the right things to
strengthen this year and some of the guardrails that you put in place last
year. I mean, several components to that.
I want to start with. RTS sort of transparency.
How has that been received over the counter sort of positions?
Yes. So there's always going to be a tension
here because understandably, banks don't want to reveal their own RTS books.
But I think there was a real feeling after March 20, 22 that as a community
we needed to come together to stop this kind of thing happening again.
And that's why we put in place the RTS reporting requirements.
And I think people have taken them in the spirit that they're intended.
You know, we're not gathering that information for commercial purposes.
We're not gathering to try to bring it on exchange.
We're gathering it purely so that our market surveillance colleagues can have
a comprehensive view of risk. So I'm really grateful that that people
have taken that, as I say in the spirit, it was intended and I think it's working
well. High margins and lower trading limits.
I mean, obviously, you'll get complaints, both sides of it.
How how long do you see that in place at some point?
Is that still part of your future? Do you want to go completely back to
that pre March event as if, as you put it, 20, 22 levels?
Yeah. Well, we've said that we really want to
make sure that we've embedded the lessons of last year.
And so I think people do need to expect that margins are going to be higher
because we really want to demonstrate to the whole market that from a risk
management perspective, that volatility that we saw is baked into margin levels.
So I think when I speak to our clients. Yeah.
They would love margins to be lower because they say they want to bring more
business to the exchange and they would do that if margins were lower.
But they also understand that it's a risk assessment.
What I feel confident about. Is that I think we now in more of a
virtuous circle. Yeah.
Last year we weren't. But this year we're in more of a
virtuous circle, which is volumes in NIKKEI are building slowly, but they are
building as volumes build. We can reduce things like our
concentration margins. A concentration margin is set to deal
with a low liquidity environment. As liquidity builds concentration,
margin reduces. People pay less margin, they trade more
and it's a virtuous circle. So, so slowly but surely.
I think we're beginning to reduce those margin levels.
We are reduce there's margin that was quantitatively not by sacrificing risk
management, but recognizing that volumes are picking up.
There's more liquidity and we can be we can meet lots of moving parts due.
Does the cycle take here to the end of the year?
Is there a timetable you can attach that at this point?
Yeah, mean, it's really driven by market participants more than more than by me.
So. So the more people who kind of get
involved in trading, the quicker that happens.
We understand that people will be conservative given given what happened
last year. But it's been really nice just at this
conference talking to delegates and and speaking to people who say, oh, you
know, last week we we started putting NIKKEI positions on again.
Yeah, they're gonna be small at first, but but that does build.
And as I say, it becomes a virtuous circle.
So I'm hopeful that we can continue to build on that momentum.