LME boss may need all his mettle to survive as investors launch law suits

The owners of the London Metal Exchange have for a decade relied on chief executive Matthew Chamberlain’s ability to provide guidance and judgment in a period of market upheaval and change.

The faith of LME parent Hong Kong Exchanges and Clearing, HKEX, never wavered, even when Chamberlain made the momentous decision to cancel billions of dollars of nickel trades in March, provoking fury from investors.

That anger prompted this week’s announcement by US hedge fund Elliott Management and market maker Jane Street that they were launching lawsuits to recover $456mn and $15mn in damages.

The outcome of the judicial review claims, along with decisions by regulators, will determine whether Chamberlain’s actions were a serious misjudgement or the right call.

But for now, despite questions over his reputation, the man who became at 35 the youngest head of a major exchange when he was appointed in 2017, has the full support of his HKEX bosses. LME will contest the judicial review claims “vigorously” and view them “without merit”, HKEX said.

Indeed, only weeks after the fateful decision to suspend trade for eight hours after a violent spike in nickel prices, HKEX, fearful of losing its most knowledgeable senior executive, persuaded Chamberlain to drop plans to quit the group, which had been announced in January.

The parent group’s faith in the LME boss is largely based on his ability to understand the complexities of market structures and trading after a spell as a technology and M&A banker. He has also shown diplomacy in pushing through reforms, in contrast to his more aggressive predecessor Garry Jones.

“Market structure is quite technical, it is quite a geeky area of the world but it appeals to my thought process, as it’s about the way things interact,” Chamberlain told the Financial Times in an interview this week.

“One of the things I found working in M&A is that I wanted to understand how a company is put together, how all of its business processes flow and interact. Market structure is the ideal place to be if you are interested in these things because it is about precisely that.”

A person who knows him added: “One of Matt’s most impressive skills is his ability to take a completely new subject and get familiar with it very quickly and work through all the noise around it and get to the real issue.”

Married with two young daughters, Chamberlain was brought up in a village outside Reading, Berkshire, but spent some of his childhood in Boston, where his father, an engineer, was working.

During his time in the US, Chamberlain developed a love of American football and is a supporter of the New England Patriots. He also has a keen interest in US presidential history.

He returned to England to study where he graduated with a degree in computer science at the University of Cambridge.

He then worked at Perella Weinberg, Citigroup and UBS as a technology and M&A banker.

While at the group, he distinguished himself as a rare banker who truly understood the exchange industry, according to a former HKEX executive, and advised them on the £1.4bn purchase of the LME in 2012.

After the deal was completed Charles Li, then head of HKEX, insisted Chamberlain join the LME board. It then turned to Chamberlain in 2017 after Jones quit.

The appointment was helped after he had impressed LME members and brokers by resolving a long-running dispute over the exchange’s warehousing system. Buyers were complaining about long queues to access their metals.

“The warehousing system wasn’t functioning well. He picked up the baton and devised a sensible and effective way of shortening the queues,” said Gavin Prentice, chair of the LME’s User Committee and a former executive at Marex, a commodities broker. “It wasn’t universally popular, but ultimately it was good for the market and that was down to Matt.”

Even so, the LME had to see off a legal challenge from Russian aluminium producer Rusal which claimed the reform plans breached its “human rights” — the same argument Elliott is now using in its judicial review claim.

His approach to implementing changes was also an important factor in his successes and different from Jones, a former derivatives trader who took a hard-charging stance to reforming the exchange to raise revenues.

People who have worked with Chamberlain have described him as being “collegiate” and “diplomatic” with an extraordinary attention to detail, and the sort of boss who looks to compromise.

But Chamberlain grew frustrated that he could not persuade users to back more reforms. Chief among them was an effort last year to turn the LME’s Ring physical trading floor with its distinctive red sofas into an all-electronic market.

After this failure, he agreed to join digital assets custody business Komainu in January. Some felt the parent company could have been more supportive to push through change.

However, so far they have been staunch in their support over the March 8 nickel trade suspension, which strengthened their desire to keep him at the LME helm.

Insiders say he was paid handsomely, with many adding he only agreed to remain at the company on the proviso of substantial remuneration, although his new contract has not been made public.

“He realises he could be made the fall guy for the nickel market. It’s not that he bears no responsibility, but he’s looking to make himself financially secure from staying,” said a friend.