NYX Nyse Euronext

The "overwhelming nature" of the London Metal Exchange shareholder vote that saw Hong Kong Exchanges and Clearing Ltd. (0388.HK) approved as the exchange's buyer reflects the "overwhelming logic" of the deal, the LME's chief executive said late Tuesday.

Hong Kong Exchanges's all-cash offer, worth 1.388 billion pounds, received approval from shareholders representing 99.63% of LME shares in July. The vote followed a lengthy bidding process for the LME, which saw the Asian exchange beat off tough competition from other major exchanges, including CME Group Inc. (CME), NYSE Liffe--the London-based derivatives arm of NYSE Euronext (NYX)--and IntercontinentalExchange Inc. (ICE).

Speaking at the annual LME Week dinner in London, Martin Abbott said the one thing that "keeps me awake at night" is the fear that the LME may not be able to maintain its preeminent position in the Asian markets, particularly in China.

"Being a part of the Hong Kong Exchanges and Clearing Group solves that problem," Mr. Abbott said.

"It means there will be the potential for RMB-denominated products, for efficient global clearing solutions and for even closer working relations with mainland China," he added.

The deal is expected to close in the fourth quarter of this year, pending regulatory approval.

The toughest situation the exchange faced in the past 12 months, meanwhile, was the collapse of MF Global Holdings Ltd. (MFGLQ), Mr. Abbott said.

"The insolvency of a broker is never going to be a good thing, and the aftermath will be even more difficult when there is an allegation of the misuse of client funds," said Mr. Abbott.

"The clearing system did protect the broader market from any knock-on effect, but this nevertheless was the toughest situation we had to deal with in the last 12 months," he said.

MF Global, which was a ring-dealing category one member of the LME at the time of its collapse, filed for bankruptcy in October last year when investors and trading counterparties fled after growing concerns that MF Global had taken outsized bets on European sovereign bonds. The firm's metals team was eventually bought by INTL FCStone (Europe) Ltd.

Mr. Abbott also made note of Bank of China U.K. unit BOCI Global Commodities's recent membership in the LME as a category-two member. BOCI is the first Chinese member of the exchange, and is unlikely to be the last, Mr. Abbott said.

Speaking to the Wall Street Journal this week, Charles Li, the chief executive of Hong Kong Exchanges, made clear his intention to promote the membership of more Chinese participants at the LME.

-Write to Francesca Freeman at francesca.freeman@dowjones.com

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