LME to cut warehouse queues

LONDON: The London Metal Exchange said on Thursday it had modified a proposal to fix backlogs in its warehouse network to affect all warehouses with queues of more than 50 days rather than 100 days as previously proposed.

The exchange also said it would act to prevent what it called "queue incentivisation". Warehouse owners in the LME network were widely reported to be offering incentives to attract metal to backlogged locations, in a bid to boost rental revenues.

"We had 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," said Garry Jones, chief executive of the LME.