Chamberlain, 35, had been acting CEO since January, when a combination of falling trading volumes and a perceived lack of strategy at the 140-year-old exchange led to the resignation of Garry Jones.
The architect of sweeping reforms to the LME's warehousing system, Chamberlain must decide whether to change the LME's complex trading structure to open it up to more fund investors in a move that would alienate many traditional members.
The LME dominates the trading of metals such as aluminium, copper and zinc, but incursions into its territory from rivals such as the Shanghai Futures Exchange (ShFE) and CME Group have seen its share of overall copper trading fall to nearly 60 percent from 80 percent in 2008.
Sources say the exchange will offer a move toward monthly futures contracts in a discussion paper to be published by early next month, cutting costs for speculative investors but eroding fees for traditional brokers.
"Matthew's experience and knowledge of the LME means that he is uniquely suited to lead the business in the next stage of its evolution," Charles Li, the head of Hong Kong Exchanges and Clearing Ltd (HKEx), which bought the LME in 2012, said in a statement.
Chamberlain was previously the LME's chief operating officer and head of business development. Before joining the exchange he worked at UBS, where he advised HKEx on buying the LME.
He won over those who questioned his lack of experience by devising a fix to the LME's warehousing queues that had for years plagued the exchange and provoked a series of lawsuits.
TICKS THE BOXES
"It was an excellent choice," said Michael Overlander, chief executive of broker Sucden Financial, one of the top tier LME members allowed to trade in the exchange's open outcry ring.
"He knows the exchange very well, he knows the players very well and he ticks all the boxes."
Malcolm Freeman, head of metals trader Kingdom Futures Limited, said: "He's picked up on the industry very quickly and has built bridges with not only the members, but clients."
A hike in trading fees two years ago drove many LME users to the over-the-counter markets, precipitating a 7.7 percent fall in trading volumes last year and 4.3 percent the year before and forcing the exchange to consider its future.
Dwindling volumes have undermined profits at HKEx, which is trying to recoup the $2.2 billion it paid for the LME in 2012.
"Matt will have to work on relationships with members and the physical market; without them there would be no LME," said the head of a metals brokerage in London.
HKEx also said it had appointed James Proudlock managing director and head of market development and Adrian Farnham as the head of the LME's clearing house, LME Clear.
Proudlock had been deputy chief executive of LME Clear since December, joining the LME from JPMorgan.
Chamberlain's appointment was effective immediately, but is subject to approval by the Financial Conduct Authority.
(Additional reporting by Pratima Desai and Eric Onstad; Editing by Mark Potter and Alexander Smith)
GLOBALES: Chamberlain chosen as LME chief with mandate to reform
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