The issue centers on LME’s linked load-in/load-out (LILO) rule, which operates by linking the amount of metal a warehouse loads in to the amount it is obligated to load out for warehouses that have queues of over 50 days.
The rule changes were part of package of reforms that arose following lengthy queues to access metal from warehouses in the exchange’s approved delivery network.
What the LME did not think about was LILO in the context of a warehouse that did not have queues.
It also did not write an anti-abuse clause for LILO, although it did write one for Queue-Based Rent Capping (QBRC), another rule introduced as part of the reforms.
Over five years...