• New simplified off-warrant stock reporting requirements, designed to provide greater visibility of LME-warrantable material, will replace the current rules from 29 February 2024.
• Existing low-stock measures to be adopted on a permanent basis with effect from 11 December 2023.
The London Metal Exchange (LME) is pleased to announce that, following a market-wide consultation, it will introduce new requirements designed to provide greater visibility of unwarranted metal stocks in LME warehouses, and make permanent existing controls around the management of low stock environments.
Robin Martin, LME Group Head of Market Development, commented: “As set out in our Action Plan published in March, providing greater transparency and increased reporting of metal stocks stored in LME-registered warehouses is important in ensuring ongoing confidence in the operation of the LME’s markets. Given consultation feedback has highlighted the desire for greater simplicity in reporting requirements, we are replacing our current ruleset with the new requirements, which are less complex and more aligned with common market practice.”
The new off-warrant stock reporting rules will require LME-registered warehouse companies to report all LME-branded material that is being stored off-warrant, without the added conditions set out in the previous reporting requirements. Additionally, to further limit operational burden for warehouse operators, none of the proposed extra reporting or notification measures will be taken forward, with only one overall tonnage figure per metal required for eligible stocks. The new rule is effective from 29 February 2024, and the first report showing February data will be available on the LME website from April 2024 on a one-month delayed basis.
The LME also notes the desire for automated and more frequent reporting of off-warrant stocks data and will work with warehouse companies, aiming to achieve this by Q1 2025.
The LME and LME Clear will also permanently adopt, with effect from 7 December 2023, the temporary controls put in place in 2022 designed to help mitigate the potential impacts of low stock environments, which include a backwardation limit on “tom-next” contracts and a delivery deferral mechanism. These controls ensure that when stocks are low, short-term delivery challenges will not cause market distortions.
The LME Group is also making several other miscellaneous rulebook changes which also formed part of the rulebook consultations.
Notes to editors
• The consultation decision notice can be found here.