Hong Kong Watch paper calls for a review into Hong Kong Government's links to the London Metals Exchange

Hong Kong Watch has today published a new paper looking at the Hong Kong Government’s indirect ownership of the London Metals Exchange, the ongoing investigation of the exchange by the Financial Conduct Authority and the Bank of England into the suspension of nickel trading last year, and the important role the exchange plays in terms of the strategic metals market which will be vital for the green energy transition.

The paper calls for the Financial Conduct Authority and the Bank of England to expand its ongoing investigation into the London Metals Exchange into the ownership of the exchange. This should include assessing whether the Hong Kong Government via the Hong Kong Exchanges and Clearing (HKEX) remains a fit and proper person to run the metals exchange.

It argues that the Hong Kong Government no longer meets the fit and proper person criteria to run the exchange, citing the ongoing human rights crackdown, its complicity in the breach of the Sino-British Joint Declaration, China’s weaponisation of the export of critical metals, and legal obligations under Hong Kong’s National Security Law which requires HKEX to ‘respect and carry out decisions of the HKSAR Committee for Safeguarding National Security’.

The full paper can be read here.

Commenting on the publication of the paper, Sam Goodman, Hong Kong Watch’s Director of Policy, said:

“The London Metals Exchange is already being investigated by the Financial Conduct Authority and the Bank of England for its unprecedented decision to suspend nickel trading. There is a reasonable argument to be made that these inquiries should also consider the Hong Kong Government’s indirect ownership of the exchange.

Given the growing importance of de-risking the UK-China relationship, protecting national security, and the green energy transition, it is hard to imagine that allowing Hong Kong officials to indirectly control this exchange and the pricing and trading of strategic metals is in the UK’s national interest.”

Lord Alton of Liverpool, a patron of Hong Kong Watch, said:

“The issuing of arrest warrants and bounties for Hong Kong pro-democracy activists in the UK, the mass arrest of pro-democracy lawmakers, journalists, and civil society leaders in Hong Kong, and the freezing of billions of pounds of pension savings from ordinary Hong Kongers, all point to why the Hong Kong Government is no longer a fit and proper person to indirectly own the London Metals Exchange.

As this report notes, the HKEX is subject to the National Security Law and has little autonomy from the Government, given the strategic importance of this exchange in setting the price of critical metals which will be vital for the UK to decarbonise its economy, it is well worth the Government investigating ownership of LME and options for its sale.”

Peter Dowd MP, a former Shadow Chief Secretary to the Treasury, said;

“On the basis of candour and transparency I believe it is worth the Bank of England and the Financial Conduct Authority looking at the question of the ownership of the London Metals Exchange as part of its inquiry for the reasons clearly laid out in this report by Hong Kong Watch.

As the refresh of the Government’s Integrated Review recently noted, the London Metals Exchange is of one of the UK’s “strategic strengths”. It is worth asking whether it continues to make sense for this UK strategic asset to be indirectly owned by the Government of Hong Kong?”