LME Warehouse reform

In November 2013, following a three-month market-wide consultation, the LME launched a warehouse reform package with twelve key elements.

All of these elements have now been implemented, or are due to be implemented shortly:

  1. Linked Load-In / Load-Out Rule (LILO) - including increased "decay factor" as of 1 August 2015
  2. Separate steel load-out rate
  3. Per-warehouse queue length report
  4. Commitments of traders report 
  5. Creation of the Physical Market Committee
  6. Specific powers for the LME to address behaviour that creates or maintains queues (clause 9.3.4 – now clause 9.3.5 – of the Warehouse Agreement)
  7. Information barrier policy review
  8. Amendments to LME policies and procedures resulting from an independent logistical review 
  9. Changes to the Warehousing Agreement following independent legal review
  10. Premium futures contracts for aluminium — launched on 23 November 2015
  11. LME powers to cap or stop rent in queues (queue-based rent capping or “QBRC”), implemented on 1 May 2016 alongside an increase in the minimum daily load-out rate (LORI), which was implemented on 1 March 2016
  12. LME powers to address structural solutions to high charges — on 6 April 2016 the LME released a Discussion Paper exploring potential long-term structural solutions to the high levels of rent and FOT for LME metals storage. This closed on 18 May 2016 and the LME would like to thank all those who submitted feedback. The LME is now consulting on the proposed introduction of Charge-Capping (“CC”), designed to address this issue of high warehousing charges. The Consultation will run from 14 July 2016 to 19 August 2016 and the LME would like to invite feedback to this Consultation from all market participants during this time.

All the items outlined above are designed to address the need to ensure that the LME’s warehouse network fully serves the requirements of the global metals market.

Documents relating to LME warehouse reform can be found below. Should you have any questions, please contact us

28-Sep-16 Charge-Capping Results Notice

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16/320 : A314 W098 Decision Notice on amendments to the LME Warehouse Agreement in respect of charge-capping

 

14-Jul-16 announcements

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16/251 : A245 : W084 Warehousing charges Discussion Paper - feedback and analysis
16/252 : A246 : W085 Consultation on proposed amendments to the LME Warehouse Agreement in respect of charge-capping
  Explanatory presentation
  LME press release

 

6-Apr-16 Discussion Paper on LME warehousing charges

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16/136 : A132 : W045 Discussion Paper relating to LME warehousing charges 
       

 

25-Nov-15 LORI and QBRC consultation results

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15/372 : A359 : W121 Amendments to the policy on approval and operation of warehouses (implementation of LORI and QBRC) and clarification of certain points relating to the LME’s physical delivery network

 

30-Sep-15 Further consultation on QBRC - proposed anti-abuse provisions

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15/302 : A294 : W103 Consultation on proposed amendments to the Policy on Approval and Operation of Warehouses Regarding LORI and QBRC
  Download the Anti-Abuse Mechanism slides

 

1-Jul-15 announcements

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15/190 : A186 : W062 Discussion paper- Feedback and Analysis
15/191 : A187 : W063 Consultation on proposed amendments to the Policy on Approval and Operation of Warehouses regarding LORI and QBRC
  LME warehouse reform - Discussion Paper conclusions and next steps Jul-15

 

22-May-15 Outstanding items from the consultation on amendments to the policies and procedures relating to the LME’s physical delivery network

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15/161 : A157 : W051 Outstanding items from the consultation on amendments to the policies and procedures relating to the LME’s physical delivery network

 

27-Apr-15 Increase in the decay factor under LILO

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15/142 : A138 : W044 Increase in decay factor under LILO

 

2-Mar-15 announcements

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15/068 : A068 : W021 Update on LME physical network reform: which provides an overview of all progress so far on the twelve item reform package
15/069 : W022 Changes to the Warehouse Agreement: outlining the LME’s response to all feedback received on its consultation on changes to the Warehouse Agreement, and confirming all rule amendments
15/070 : A069 : W023 Amendments to the Policies and Procedures relating to the LME’s physical delivery network: outlining the LME’s response to all feedback received on its consultation on changes to the policies and procedures (including premium contracts, logistical review and separate load-out rate for aluminium alloys) and confirming all changes to be made
15/071 : A070 : W024 Consultation on proposed amendment to the decay factor in the Linked Load-In / Load-Out Rule
15/072 : A071 : W025 Discussion Paper relating to possible reforms on warehousing policy and physical delivery network
  Media presentation

 

7-Nov-14 to 9-Feb-15 Consultations

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14/319 : W149 Consultation on changes to the Warehouse Agreement
14/318 : A310 : W148 Consultation on proposed amendments to the Policies and Procedures relating to the LME’s physical delivery network

 

LILO Re-consultation and Results Oct 14

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14/311 : A303 : W146 Introduction of the Linked Load-In / Load-Out Rule
14/298 : A290 : W142 Proposed implementation of the Linked Load-In / Load-Out Rule – Consultation with warehouses pursuant to warehouse agreement

 

Updates

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14/276 : A268 : W136 Update on LME warehousing reform
14/121 : A117 : W056 Update on Warehouse and Physical network Reforms
February 2014 LME Press Release
14/039 : A037 : W024 Announcement of Warehouse and Physical Network Reforms

 

Results of the Original Consultation 7 Nov 13

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14/311 :A303 : W146 November 2013: Garry Jones, LME CEO, on warehouse reforms – video
November 2013 LME Press Release
13/326 : A312: W125 Result of 2013 Warehouse Consultation
13/327 : W126 Further consultation on proposed amendments to the Lme warehouse agreement and policy regarding Approval of warehouses
  Public report
  Proposed revised LME Policy Regarding the Approval of Warehouses

 

Original Consultation Notice 1 Jul 13

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13/208 : A201 : W076 Original Consultation Notice (1-Jul-13)

 

Other

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FAQs Frequently asked questions