LME WEEK 2019: Shadow-stock reporting faces headwinds but LME reform on right path – sources

The London Metal Exchange’s mission to create more transparency in stock levels may not be popular with the whole market but it is a big step toward fixing key issues with the exchange, sources told Fastmarkets.

The LME is expected to implement a series of reforms in 2020 that will make big changes to warehousing after it launched a market consultation in July this year.

Extending the queue-based rent cap (QBRC) threshold to 80 days and changes to “evergreen” rent deals are included in the proposal, but the most controversial reform relates to off-warrant stock reporting.

“Warehouse reform is always a controversial topic for the LME exchange and its members, and the new reform is no different. We expected this but the off-warrant stock reporting has made everyone’s eyes bulge,” a market source said.

The exchange is proposing to introduce a stock reporting process that reflects off-warrant storage to achieve increased transparency of global metal stocks.

Currently, a significantly number of metal owners choose off-warrant storage as an alternative to warranting metal onto the LME, but they still have the ability to warrant...


Alice Mason

October 24, 2019

12:57 GMT