London Metal Exchange Launched Fresh Rules for OTC Reporting

SEATTLE (Scrap Monster): The London Metal Exchange (LME) approved new set of rules which makes reporting of all over the counter (OTC) positions by members. The new move follows the recent spike in traded nickel prices, for which the exchange too was partly blamed.

According to exchange press release, the new rules are scheduled to take effect on 18th July, 2022. The rules make it mandatory for all members to disclose contracts of physically deliverable metals traded over the counter, on a weekly basis. It introduces a weekly OTC position reporting framework as well as an extension of accountability levels to OTC positions. Meantime, the exchange announced that the existing requirement to report OTC nickel positions on a daily basis has been withdrawn.

Also, the holders of large OTC positions must inform the exchange the rationale for holding them.

The enhancement of the exchange’s visibility of OTC markets is in the interest of the market and is expected to improve LME’s ability to oversee activity holistically. The regulatory obligations will help to ensure future market stability, it noted.

LME had received 27 responses during the two-week consultation period, with majority raising opposition to introduction of OTC rules before the completion of probe into the recent nickel trading halt.

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