FCA Statement on the London Metal Exchange (LME)

The FCA supervises the London Metal Exchange (LME) as part of its oversight of recognised investment exchanges. Whilst the LME’s warehousing arrangements are not directly regulated by the FCA, they play an important role in the functioning of the LME’s market.

We expect the LME to ensure that approved warehouses provide effective and efficient services for the receipt, holding, and delivery of metal related to the trading of LME contracts, to support the LME in meeting its regulatory obligations as a recognised investment exchange.

The LME has recently instigated a number of initiatives in relation to its warehousing arrangements, to manage potential conflicts of interest arising from the ownership of warehouses and to reduce queue lengths. 

We have engaged with the LME to ensure these changes, including the Linked Load-In and Load-Out rule, are consistent with its regulatory obligations.  We see these measures as a first step towards strengthening LME’s warehousing arrangements and increasing the transparency of its market.     

We will continue to engage with the LME and other stakeholders to monitor the impact of all the measures announced by the LME.