LME faces new battle in Washington after UK court victory
London bourse caught between a rock and a hard place as US politicians call for a cap on its warehouse rents to discourage stockpiling
Fresh from a court victory in Britain, the London Metal Exchange now faces one of the biggest hurdles yet in its years-long crisis over its warehousing policy that consumers say has inflated prices: convincing US lawmakers its reforms are enough.
When Britain's Court of Appeal handed a victory to the LME last week, knocking out a challenge to the reforms by Russian aluminium giant Rusal, the exchange's head of business development, Matt Chamberlain, was in Washington, a source familiar with the matter said.
Chamberlain was there to plead the exchange's case with lawmakers who have been pushing for even greater change to its warehouse policy.
Senator Sherrod Brown was among the people the LME visited, a spokeswoman for the senator said. The Ohio democrat has been a fierce critic of the bourse, urging US regulators to crack down on the 137-year-old exchange and threatening to write rules that would compel regulators to intensify oversight of the exchange on US turf.
Brewers like MillerCoors, which uses aluminium for beer cans, have complained that the LME has not done enough over the past four years to tackle excessive stockpiling by warehouses owned by Wall Street banks. They say this has driven up prices.
Now, sources say Brown is pushing for the world's oldest and biggest metals market and its warehousing network to take its most drastic step yet: cap rent that warehouse operators can charge on metal stored in their sheds, discouraging stockpiling by putting a limit on the money to be made from storing.
