Growing concernsof increasing fees prompted the London Metal Exchange to freeze maximum rental ratesat its global network of warehouses for five years, Reuters reported July 14, citingMatthew Chamberlain, the exchange's head of business development.
Meanwhile, LME CEO Garry Jones said the proposed plan will "bringclarity and stability to the industry, with minimal market disruption."
LME changed the rules to speed up deliveries at its global networkof more than 600 warehouses at 37 locations.
A consultation process has been launched on the proposed plan,which will be implemented in April next year.the consultation will close Aug. 19 and its findings are expected by September-end.
Under the plan, the exchange will initially set warehouse rentsand free-on-truck charges by calculating the average of the highest published chargesfor the years 2015-16 and 2016-17. The charges will be set for each metal and countryseparately.
Once the freeze ends, rates will be increase annually based onthe consumer price index.
According to a recent report, rising fees and attempts to drawhigh-speed electronic traders to the London Metal Exchange is prompting existingusers to look at other avenues.
Earlier in June, former LME CEO Martin Abbott was seen the potential for a newmetals-trading platform due to concerns that trading on the LME had become too expensive.