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Warehouse reform 2013-2016

Warehousing

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:

  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 (PDF))
  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 (charge-capping).

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 (PDF)

14-Jul-16 announcements

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

Explanatory presentation (PDF)

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 (PDF)

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 (PDF)

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 (PDF)

Anti Abuse Mechanism Slides (PDF)

1-Jul-15 announcements

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15/190 : A186 : W062 Discussion paper- Feedback and Analysis (PDF)
15/191 : A187 : W063 Consultation on proposed amendments to the Policy on Approval and Operation of Warehouses regarding LORI and QBRC (PDF)

LME warehouse reform Discussion Paper conclusions and next steps Jul 15 (PDF)

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 (PDF)

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

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

2-Mar-15 announcements

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15/068 : A068 : W021 Update on LME physical network reform (PDF)
Provides an overview of all progress so far on the twelve item reform package
15/069 : W022 Changes to the Warehouse Agreement (PDF)
Outlines the LME’s response to all feedback received on its consultation on changes to the Warehouse Agreement, and confirms all rule amendments
15/070 : A069 : W023 Amendments to the Policies and Procedures relating to the LME’s physical delivery network (PDF)
Outlines 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 confirms 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 (PDF)
15/072 : A071 : W025 Discussion Paper relating to possible reforms on warehousing policy and physical delivery network (PDF)

Media presentation (PDF)

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

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

LILO Re-consultation and Results Oct 14

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

Updates

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

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 (PDF)
13/327 : W126 Further consultation on proposed amendments to the LME warehouse agreement and policy regarding Approval of warehouses (PDF)

Public Report (PDF)

Proposed revised LME Policy Regarding the Approval of Warehouses (PDF)

Original Consultation Notice 1 Jul 13

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

Other

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FAQs Frequently asked questions (PDF)

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