The London Metal Exchange (LME) is considering launching a market-wide consultation to review and potentially amend the operational rules governing its 450 registered warehouses worldwide, CEO Matt Chamberlain told Reuters.
More than ten years ago, the LME implemented the Queue-Based Rent Capping (QBRC) system, which limits warehouse rental income to 80 days once a metal owner has given notice to withdraw their material. The measure was meant to discourage long delivery delays, but it has since led to unintended consequences.
Under the current structure, traders often cancel warrants to secure free storage beyond the 80-day cap, while manufacturers and end-users face challenges accessing metal from warehouses with long queues.
“We recognize there are always differing views on how issues like load-out rates and rents are managed,” Chamberlain said ahead of LME Week, the industry’s flagship gathering in London. “We maintain active dialogue with stakeholders, and when appropriate, we’ll bring specific proposals to market consultation.”
Earlier this year, Reuters reported that the LME was preparing such a consultation. According to sources, one proposed alternative to QBRC could involve mandating a percentage of metal to be loaded out within a defined timeframe.
Other potential reforms may include prohibiting “rent deals”, in which warehouses share rental income with companies that deliver metal to them. Under these arrangements, the delivering firm may no longer own the stored metal but continues to earn a share of rent as long as it remains in storage—costs ultimately borne by the new owners.
Despite the existing safeguards, storage queues resurfaced in 2024, renewing industry debate over the efficiency and fairness of the LME’s warehousing framework.
The London Metal Exchange, a cornerstone of the global metals trade, is owned by Hong Kong Exchanges and Clearing Ltd. (HKEX).