The world’s largest metals exchange said it is taking legal advice on whether to appeal the London high court’s decision. The court ruled in favour of Rusal on the illegality of a reform to cut maximum warehouse queue times. As a result, the LME’s reform will be quashed and it will be required to carry out a consultation process to address the concerns.
But the court ruled in favour of the LME on other issues put forward by Rusal in the proceedings.
“We continue to believe that Rusal’s complaint was without merit in its entirety and are currently taking legal advice with regard to our options, including appeal or re-consultation,” said the LME in a statement.
The LME outlined a package of reforms in November, designed to cut queues and tackle market abuse, most of which will be implemented by 1 April.
The metals exchange had been under intense pressure to reform its warehousing system after it was alleged that some warehouse owners were deliberately inflating waiting times to more than a year to deliver metals. Warehouses charge rent on queued orders so will make larger profits the longer the metals are stored, while holding back supplies will raise prices.
“We welcome this decision by the high court and look forward to working closely with the LME, and indeed all key stakeholders, to ensure that the revised consultation period and subsequent rule changes serve to increase the integrity of price discovery and transparency across the market, which we believe are the key issues continuing to face the sector,” said Rusal’s chief executive Oleg Deripaska.
Other parts of the LME’s reform package that are still going ahead include a logistical review, the creation of a physical markets committee and enhanced powers to address artificial queue formations.