But signs are that metal markets are increasingly becoming aware of the growth of technology and the lucrative potential of electronic commerce on the internet.

LME board chairman Lord Bagri told metal market players gathered in London for the annual LME week that the exchange will review all business areas that could be affected by technology, notably automated screen trading.

"We are, however, committed to the urgent creation of the capacity to move an increasing amount of pre-market and after hours business to automated trading systems.

"This will give us the opportunity to replace ring trading with such a system if and when such a move is considered appropriate and necessary," Bagri said.

No threat yet to ring sessions

Bagri said this did not signal a desire to move away from the floor and the twice-daily open-outcry ring trading sessions which are the core of the LME's price discovery system.

Dealers said although the market recognised the need for keeping up with the technological change, the base metal market has shown little need for automated trading.

"I honestly don't think there is any threat to ring-trading," said one senior LME dealer.

"Any moves to automate any of our functions are not driven by any market need. I think it is wise to be aware where it would improve the market but I am far from convinced it is necessary and that it will have members' support," he added.

Metals are traded in the daily ring sessions and outside the rings via a telephone market in operation virtually 24 hours.

Inter-office market volumes rising

Some dealers and analysts pointed to increasing volumes during telephone inter-office trade and predicted that volumes traded could match ring volumes in a year or 18 months' time. Inter-office trade often matched or eclipsed ring volumes.

On Tuesday 54,344 lots of copper were traded on the telephone market, compared to 8,992 on the LME floor. In aluminium, 1,04,950 lots were traded in the inter-office market and 10,976 in the LME rings.

Although those figures might not reflect an actual trend due to the annual LME week gathering in London, inter-office trade is increasing, Brandeis' Bhar said.

"There are a lot of days where pre-market volume can be quite significant and often be found to be greater than the ring sessions. It is a trend we have noted for several months now".

Another dealer said between 60 and 70 per cent of the LME's multi-billion business is conducted on the exchange floor.

"Ring business is still the predominant one. I think you would see that move closer to parity in the next 12 to 18 months," the dealer said.

Technology will dictate pace of change

The LME created a prototype electronic trading system as a precaution a few years ago, but did not take it to completion because there was no demand at the time.

The base metals market has already seen one ring-dealer, MGPlc, launching an internet trading website (www.mgltd.co.uk), which allows trading, execution and real-time prices for the base metals traded on the LME.

Analysts and industry players said MG's website will likely be followed by other ring-dealers.

"It is coming and it is going to be difficult to stop it, whether you are a supporter or not of automated trading, whether that is Screen-based or internet-based," said metals analyst Robin Bhar of brokers Brandeis.