LME warehousing policy: the proposals, the discussion and what it all means

As the London Metal Exchange continues to work on ways to adapt its warehousing policy to address the long-running issue of queues, Metal Bulletin looks in depth at its latest proposals and comments.

Following the release of the responses to its most recent logistical and legal consultation, as well as a new consultation on a proposed change to the parameters of the linked load-in/load-out (LILO) rule and a discussion paper on issues including banning rent in queues, a number of key topics emerged. Among them were a more specifically delineated definition of what constitutes an “abusive” incentive, as well as concerns over the possibility that proposed changes to LME policy could introduce volatility into its aluminium premium contract, scheduled for launch on October 26. Incentives “Where we feel incentives are potentially abusive is when they’re funded by the existence of a queue,” Matthew Chamberlain, head of business development at the LME, said. “We believe it’s not right for warehouses to channel profits from trading companies to metal owners. It’s not right that the warehouse is the conduit through which that’s paid.” A warehouse...


Claire Hack

March 03, 2015

14:23 GMT