(Updates with Li’s comments from second paragraph.)
Oct. 7 (Bloomberg) -- Adopting commitments of traders reports similar to those issued by U.S. Commodity Futures Trading Commission is a “matter of time” for the London Metal Exchange, the chief executive of the bourse’s owner said.
“We have no reason to believe it shouldn’t be done, it’s just a matter of time,” Charles Li, CEO of Hong Kong Exchanges & Clearing Ltd., said at the LME Seminar in London today. “Any effort to get the exchange to be more transparent has to be welcomed and obviously in the end we need to figure out how to do it.”
The LME may start publishing reports on futures trading positions from next year after directors review the plans later this month, the Financial Times reported today, citing unidentified people familiar with the plan. Aluminum producers and consumers have urged the London bourse to start reporting similar to the CFTC’s. The decision will be made by the LME’s board, said Li. The possibility of publishing reports “has not even been discussed” and the bourse will review its options and then decide, Garry Jones, the LME’s CEO, said in an interview in London today.
The LME publishes so-called warrant holdings reports that don’t reveal the type of holder of a position and are delayed by two days. The U.S. CFTC releases weekly reports breaking down positions by type and NYSE Liffe, the derivatives arm of NYSE Euronext, began giving similar information for agricultural products in 2011. ICE Futures Europe also started publishing Commitments of Traders Reports in Europe for Brent crude and gasoil in 2011.
Aluminum makers including United Co. Rusal, Alcoa Inc. and Norsk Hydro ASA have urged the LME to boost transparency by disclosing trader holdings. A user group which includes the Washington-based Beer Institute and American Beverage Association last month also called for the LME to introduce the reports.
The LME, which has a network of more than 700 warehouses, is reviewing the consultation on a proposal to speed up deliveries at its depots. The exchange had a “very exhaustive consultation,” holding 70 meetings in London, the U.S. and Asia, Li said. The changes will be reviewed by the LME board this month and if approved come into force April 1.
“We have listened, and we absolutely listened, and we wanted to listen,” Li said. “The views are very divergent. This is a very complex issue and we are not in the business of determining who’s the loser and who’s the winner. Let the market decide on that.”
170 Million Contracts
The LME, bought by Hong Kong Exchanges for $2.2 billion last year, consulted market participants until Sept. 30 on a plan to ease backlogs of metal at its warehouses that can stretch to a year. A total 170 million contracts, equal to $15 trillion and 4 billion metric tons of metals, changed hands at the LME in the past 12 months, Diarmuid O’Hegarty, deputy CEO, said at the metals seminar. The bourse is on track for a record year, he said.
The exchange moved from a “constrained-profit” model to being “a division of a commercial enterprise with a global reach,” Jones said.
“The exchange has to change over that period and it’s in the middle of that change right now,” Jones said. “The members are very important in the transmission mechanism but the consultation and the needs of the industry are broader all the way along that spectrum.”
--Editors: John Deane, Nicholas Larkin