The London Metal Exchange has launched a consultation process on warehousing reforms that aims to attract higher stock levels, Matthew Chamberlain, LME chief executive, announced on Thursday July 25.
The consultation began on Thursday and is open until September 2019. It includes changes to evergreen rent deals and the controversial queue-based rent capping (QBRC) rule as well as the introduction of off-warrant stock reporting. "There is general market agreement that higher LME stocks would be desirable, but two opposing views on how to achieve this," Chamberlain said. "The LME understands the perspective of those who seek lower rents and enhanced logistics from LME-listed warehouses - and while we are introducing many logistical enhancements in this consultation, we believe that fundamentally reforming the LME network in an attempt to compete with highly discounted off-warrant storage may fail, and indeed result in reduced stock levels," he added. Therefore, the LME is proposing to extend of the current freeze on maximum levels of rent and free-on-truck (fot) until 2027-2028. It said this is to ensure that the gap between headline rates for...