LME suitors woo the board The London Metal Exchange has been playing the field for the best part of a year. Now the time is drawing near for the 135-year-old exchange to choose one of its suitors and settle down. The choice, narrowed down to just two from an early field of more than 10, is stark. Hong Kong Exchanges & Clearing (HKEx) is playing the role of the dashing and mysterious foreigner. It is wooing the LME's shareholders - mainly banks and brokers - with the promise of greater access to China. On the other hand, IntercontinentalExchange (ICE) of the US is a known quantity. It is already one of the world's top commodity exchanges, hosting benchmark contracts for crude oil, sugar and coffee. Its chief executive, Jeff Sprecher, has coveted the LME for years - indeed, he initiated the bidding war last summer by making an unsolicited approach after the LME announced it was considering building a clearinghouse. The suitors have been in London this week, meeting some of the LME's shareholders. On Thursday, the LME's board will hear presentations from the two bidders. On the surface, HKEx might look disadvantaged. It has no experience running a commodity futures exchange, no clearinghouse in Europe, and half of its board is appointed by the Hong Kong government. In contrast, ICE is pitching itself as an experienced operator and level-headed steward of the LME, which hosts the global benchmarks for all the world's most widely traded non-ferrous metals. ICE's experience running futures exchanges - it has made a dozen acquisitions since 2001 - suggests it would be able to integrate the LME fairly smoothly into its current operations. It already has a clearinghouse in London. And it is based in the US, as many of the LME's members are, which is among the most active promoters of transparency and regulation of commodity markets. Ironically, however, those points may count against the ICE bid. Because it has a large futures business already, some shareholders fear that it would force the LME to conform to its existing model - for example, eventually, by switching the LME's daily delivery system to monthly futures, or doing away with the open outcry trading ring. This despite the fact that ICE, like HKEx, has stated its intention to keep the key features of the LME, including the date structure and the ring, as they are. While HKEx's lack of a clearinghouse in Europe means there would be a greater delay in bringing LME's clearing in-house, it also means that the clearinghouse would be custom built for the LME - indeed, HKEx would probably stick with the LME's current project to build "LMEClear." And while some shareholders are reassured by ICE's ties to the US, others are disconcerted, fearing that it could provide a means for overzealous US regulators to meddle in their exchange. Ultimately the LME's board and shareholders must choose between the devil they know and the devil they don't. Some of the larger banks may favour the less risky option of selling to ICE, but most of the shareholders I have spoken to thus far have been smitten by the allure of HKEx. One thing is clear though - at current prices the exchange is likely to be sold. When they were last putting numbers on the table, the two bidders valued the exchange at £1.2bn-£1.3bn. With a final round of one-upmanship still to come, significantly higher valuations could be in the offing. In the end, who gets to walk the LME down the aisle may be a simple question of how deep his pockets are.