London Metal Exchange plans reforms to cut long warehouse queues

The London Metal Exchange, the world's largest metal bourse wholly owned by Hong Kong Exchanges and Clearing, will carry out a package of reforms in April to solve warehouse congestion.

The LME yesterday said its directors had approved changes to its procedures designed to cut queues at its warehouses. This came after a three-month consultation with the global metals industry in July.

"As the world's leading base metals exchange, the LME has a duty to the entire metals community to run a fair and orderly market," said LME chief Garry Jones.

"We have a responsibility to examine concerns raised about lengthy warehousing queues, as these pose a range of issues in terms of price discovery and price convergence as well as the use of the market for effective hedging."

HKEx in December last year spent £1.39 billion (HK$17.3 billion) to buy the LME in a bid to expand into commodities but the deal came at a time when metal users were complaining of malfunctions and long queues for deliveries. The reforms, the largest change to the LME after the HKEx takeover, is aimed at addressing users' discontent and enhancing warehouses efficiency.

The reforms now target queues of more than 50 days, instead of 100 days as initially proposed in July.