This article was written by David Gaddes. All views and opinions are strictly his own.
The LME Dinner will be with us again soon, and this past year I have had many a discussion about its future or lack of it, in terms of the LME floor and the trading that is conducted there. If that goes, I for one shall miss it. I say that despite the fact I rarely go there these days. However, that is caused more by a change in my circumstances than the LME’s. It used to be a focal point for clients during the early part of the Dinner week and I can remember many occasions when a client asked me to take him or her down to the Exchange. I always tried to take them for the official second rings, when in the past you could be assured of some action. It was always a joy to see some of the clients’ faces when the noise rose as the official rings neared their close in some metals. I enjoyed seeing some of the heated exchanges between the dealers as the ring neared the bell. What saddens me a tad is that the increase in online trading has coincided with the disappearance of the characters that were sprinkled like stardust around the world of metals. I was lucky enough to have served during a time when these characters were commonplace and made many a day more enjoyable. I know a lot of the stories about these characters can be distorted over the years, but that happens with the telling of stories about life and history in general. This is not unusual. I have sat next to somebody during a rugby or a football match and in the bar afterwards I have often wondered if that person sitting next to me watched the same match as I did.
I mourn the disappearance of these characters. One of the gentlemen I refer to was an Introducing Broker (IB) with an LME ring dealing member. He handled some of my LME orders in tin and nickel when I was trading those metals physically for the organisation that represented the USSR in London. We used to call IBs then “half commission men”. He sat in the brokers office but ran his own business. He was working at one of the eight brokers that we used at that time to hedge our book in base metals. We also used the LME as a source and an outlet for these metals physically. One day we heard a rumour that one of these brokers was in financial difficulties. I mentioned this to my boss and he preferred that I clear all of the LME positions we held with that broker to one of the others. He wanted it done as soon as possible. So that day I had lunch with my friend who handled our business at the broker having financial difficulties, gave our clearing instructions and explained why. He was visibly upset but understood our position. I suggested we had a drink that evening with the IB taking the positions.
The three of us went to a cocktail bar in the old Plantation House to talk about the practicalities of the task ahead. My friend the IB was a renowned drinker, and his favourite tipple was a gin and tonic. We arrived at the bar at 6 pm in the middle of that bar’s Happy Hour. There were large signs around the bar declaring HAPPY HOUR – ALL COCKTAILS HALF PRICE. So my friend from the broker with financial problems and I ordered a cocktail and my IB friend ordered a gin and tonic. I can’t remember the prices at that time but for the sake of this story let’s say the cocktails and spirits with mixers were usually £10 but during Happy Hour they were half price at £5. The barman said “That will be £20, sir”, to which the IB replied: “Why £20? Shouldn’t it be £15 during Happy Hour?”. The barman smiled triumphantly: "Sir. All COCKTAILS are half price. But you ordered 2 cocktails and a gin and tonic and a gin and tonic is not a cocktail”. The IB looked at the barman and replied “ Well stick a f*****g cherry in it then”
The barman considered this request. He turned around, took a cocktail stick with which he pierced a glazed cherry, and promptly dropped both into the gin and tonic. " That will be £15, sir”.
Technology is taking over the world. I just cannot help thinking that in adopting electronic trading we lost something special. One thing is certain. You don’t have to be a character to use a keyboard.
I know which I prefer.