- LME proposes to introduce copper Certificate of Analysis requirement to strengthen transparency and operational efficiency
- Auditing of warehouse companies’ procedures around confidentiality to be extended to cover all warehouse operators
- Continuation of charge cap on Rents and Free on Truck (FOT) rates to cover the period 2027-2032
The London Metal Exchange (LME) has today issued a combined consultation and discussion paper that considers a number of possible enhancements to its physical market operations – and, in particular, its warehousing network.
The LME undertook an extensive programme of reform to its warehousing rules between 2013-2016 and has kept them under active review since then, including further changes in 2019-2020. Recently, several topics have emerged on which the LME would like to take action to ensure that its operations keep pace with developments in the market and continue to meet the needs of users. The changes set out in the paper have been developed with the broad aims of improving operational transparency and efficiency, supporting fair access and competition between warehouse operators and enhancing the robustness of physical delivery mechanisms.
Georgina Hallett, LME Chief Sustainability Officer and Head of Physical Markets, said: “These proposed changes are significant for both the LME approved warehouses that are such a critical element in the physical delivery mechanism that supports our market, and to the requirements for copper, one of our core metals.
“We recognise the need to keep pace with an ever-evolving environment. The suggested changes are designed to ensure that our requirements provide the transparency and efficiency that are so important to the physical market. We welcome views from all those interested as we work to deliver the right changes for the sector.”
Consultation
The proposals on which the LME is consulting are:
- Copper is the only metal for which the LME does not require a Certificate of Analysis (CoA) when it is placed on warrant. The LME proposes to make a CoA a requirement for copper to align it with other metals and promote wider market efficiency and transparency and is seeking market views on this, as well as requiring indelible markings of production cast references on bundles of copper.
- Extending the requirements for the auditing of warehouse companies’ procedures around confidentiality to cover all warehouse operators (the current requirements apply just to those warehouse companies that have close links to an LME trading entity). The LME believes that requiring all warehouse companies to audit their information barriers would ensure good practice in relation to confidentiality of stock information.
- Rents and Free on Truck (FOT) charge cap rates are currently frozen, but this is due to end for the 2027-2028 charge year. Although the effect of relatively high inflation in recent years has been to reduce the gap between LME charge cap rates and both off-warrant and bilaterally negotiated LME storage costs, a material difference still exists. The LME is proposing, therefore, to freeze charge cap rates for a further five years between 2027 and 2032 to facilitate a further closing of the cost gap.
- The other areas for consultation are: the standardisation of FOT quoting, the introduction of a charge cap for re-warranting fees, and requiring warehouse companies to submit standard reports for warranted metal on LMEpassport.
Discussion
The paper also sets out a number of areas where the LME seeks the views of the market:
- Queue based rent-capping (QBRC): the paper asks whether the current cap on rents (which lowers rent to zero should a warehouse fail to load out required metal within 80 days) and the requirements around the speed of loading metal in and out of warehouses, could be replaced with a requirement to load-out 1.5% of metal on warrant on a daily basis. It also asks whether, alternatively, QBRC could instead be disapplied to cancellations of metal over 10,000 metric tonnes to ensure larger warehouses are not disincentivised from loading in metal due to the additional load-out requirements of a percentage-based load-out model.
- Evergreen rent deals give a metal owner that sells metal on warrant in an LME warehouse an entitlement to a share of the rent collected from the new metal owner. Proponents of evergreen deals suggest that they provide incentives for metal to be put and kept on warrant, while others point to an increase in the trend for metals shifting between warehouses to qualify for new evergreen rent deals, which has the effect of creating “noise” in stock movements. The LME is interested in views on whether evergreen rent deals should be ended.
- The other topics under discussion are designed to confirm that the structure of the LME’s warehousing network remains best-in-class, and comprise an anti-abuse provision for the Linked Load-In Load-Out requirement (LILO); requiring additional metal to have indelible markings of production cast references; the re-assessment of the need for aluminium to be stored indoors and the need for warehouses to be located in areas of net consumption.
Alongside the consultation and discussion elements of the paper, it also includes details of a number of areas where the LME is informing the market of minor amendments to its requirements that do not require a consultation.
Responses to the consultation or discussion sections of the paper should be made by 8 May 2026.
Background
Please see the combined consultation and discussion paper 26 063 LME Physical Markets Consultation and Discussion Paper (PDF).
The warehouse reforms from the period 2013-2016 can be found on the LME warehouse reform 2013 to 2016 page.
The warehouses reforms from the period 2019-2020 can be found on the LME warehouse reform 2019 page.
