LME CEO Defends Exchange Amid Industry Unease
By Francesca Freeman and Ben Winkley
LONDON--The new head of the London Metal Exchange on Monday was quick to defend the more-than-century-old institution amid industry unease about transparency and criticism of long waiting times for metal deliveries at LME warehouses.
Speaking at the start of LME Week, the annual gathering in London of the metals industry, Garry Jones said he comes to the new role "with no hidden agenda."
"We are an exchange," Mr. Jones said in his welcome address. "We are not a player in the market. We are a transparent, central market place and that's very important to us."
Several large users of the LME, including hedge funds, producers and other traders, have called on the exchange to release regular "commitments of traders" reports in the same way that the IntercontinentalExchange, the New York Mercantile Exchange and the Chicago Mercantile Exchange do. This would put into the public domain the amount and direction of speculative money being wagered in metals futures markets.
Alcoa Inc. (AA), the U.S.'s biggest aluminum producer, recently said, "The LME should not wait for pending regulation to force the exchange to improve transparency."
Recent criticisms of the exchange--which include long queues being experienced by clients to remove metals from the LME's warehousing system--are likely to be a key feature of this years' LME Week event. The U.S. Justice Department and the Commodity Futures Trading Commission have begun investigations into the warehouse logjams.
The LME has said it expects to issue new rules this month to cut bottlenecks, but many market participants are skeptical its proposal will resolve the problems.
In a letter sent to the LME and regulators, reviewed by The Wall Street Journal in September, a group of aluminum users said that long delays to get aluminum out of storage are still possible under the new rules.
The group is made up of beer and beverage makers represented by the Beer Institute and the American Beverage Association, including MillerCoors LLC, Coca-Cola Co. and Dr Pepper Snapple Group Inc. It suggested eliminating long wait times for aluminum by the end of the year and barring warehouses from offering incentives like cash payments to lure metal into storage.
"We believe that the current system is dysfunctional and prone to manipulation," the group said in the letter. The LME declined to comment.
--Tatyana Shumsky and Matt Day in New York contributed to this article.
Write to Francesca Freeman at email@example.com
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(END) Dow Jones Newswires 10-07-130848ET Copyright (c) 2013 Dow Jones & Company, Inc.