NEW YORK The United Kingdoms financial regulator has given its tacit backing to the London Metal Exchanges rule changes by ensuring they are consistent with the exchanges regulatory obligations.
"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," the Financial Conduct Authority (FCA) said. "We see these measures as a first step toward strengthening the LMEs warehousing arrangements and increasing the transparency of its market."
The regulators comments came in response to the LMEs formal announcement that it has shortened the limit on the length of queues it will permit at individual warehouse locations to 50 days from a 100-day limit proposed in July.
In sweeping new rules announced Nov. 7, the LME also said it would take action to prevent queue incentivization and introduce a number of other recommendations proposed by stakeholders during a three-month consultation on its proposals.
The LME is obligated as a recognized investment exchange 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," the FCA said. "We will continue to engage with the LME and other stakeholders to monitor the impact of all the measures announced by the LME."