LME floor trader Sigma in talks to sell brokerage, sources say

Marex

05/02/2025 18:46

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      Sigma was first LME floor dealer to join in 15 years
    

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      Entire brokerage, including US and Dubai units, up for
sale
    

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      Sigma recorded 1.37 million pound loss for year ending May
2023
    

  
 (Updates with third source and more details)
    By Pratima Desai and Eric Onstad
       LONDON, Feb 5 (Reuters) - Sigma Broking, one of eight
members of the London Metal Exchange allowed to trade on the
open-outcry floor, is in talks to sell its business three years
after joining the LME, three sources with knowledge of the
situation said.
    Sigma became the first new floor-trading member of the LME
in 15 years in 2022 when it joined the exchange, the world's
oldest and largest market for industrial metals.
    One of the sources said Sigma's reasoning for the move to
sell may partly be due to much higher capital requirements
imposed by the LME's clearing house and the second source said
Sigma had hired advisers for the sale. 
    A third source said the whole brokerage business was for
sale, including metals, equities, fixed income and its U.S. and
Dubai units. Six parties were interested, the source added. 
    All three sources declined to be named.
    Sigma's main clients are investment funds, but its business
has been thin recently, four industry sources said.
    According to the most recent accounts filed, Sigma Broking
recorded an after-tax loss of 1.37 million pounds ($1.71
million) for the 12 months to end-May 2023.
    The future of ring trading had been uncertain at the LME,
one of the last venues in the world to still support it, after
Societe Generale dropped out last year.
    At the time, all the remaining floor trading members except
Sigma told Reuters they remained committed to open-outcry
trading. Sigma had declined to comment.
    The LME has said the floor would close if the number of ring
members falls below six, or if their trading volume in the
second ring falls to less than 75% of last year's level.
    Ring trading at the LME got a renewed vote of confidence in
December when the British arm of U.S. broker Clear Street joined
as a Category 1, or floor trading, member. 
    Sources told Reuters that Clear Street Futures poached at
least three metals traders from Sigma as it built up its London
operation.
    Clear Street Futures, headed by Chris Smith, previously the
London-based global CEO at ED&F Man Capital Markets, was
acquired in 2022 by Marex  MRX.O , another LME broker.
    The LME is owned by Hong Kong Exchanges and Clearing Ltd.
 0388.HK 
    ($1 = 0.7997 pounds)

 (Reporting by Pratima Desai and Eric Onstad. Additional
reporting by Polina Devitt. Editing by Veronica Brown and Mark
Potter)
 ((mailto:eric.onstad@thomsonreuters.com; +44 20 7542 7093;
Twitter https://twitter.com/reutersEricO; Reuters Messaging:
rm://eric.onstad.thomsonreuters.com@reuters.net/))