RPT-LME to go ahead with warehousing changes, contest Rusal challenge
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SINGAPORE, Dec 24 (Reuters) - The London Metal Exchange said on Tuesday it will go ahead with planned changes to its warehousing policy aimed at addressing massive queues for metal despite top aluminium producer Rusal challenging the proposal.
The LME proposed new rules to overhaul its delivery system from next April that would force warehouses to release more stocks once the waiting time breaches 50 days. The exchange said in November it was determined to press ahead with the changes.
However, Russia's United Company Rusal Plc has filed a judicial review, which seeks to challenge LME's decision to introduce changes in its warehousing policy.
LME was named as a defendant in the review filed by Rusal in the English High Court on Monday, according to a disclosure by Hong Kong Exchanges and Clearing Ltd, which owns LME.
"Rusal has alleged that the consultation conducted by LME was unfair and procedurally flawed, that the LME's changes to its warehousing policy are irrational and disproportionate, and that Rusal's human rights have thereby been breached," HKEx said.
The LME "considers that the grounds of Rusal's complaint are without merit, and will defend any judicial review proceedings vigorously", the statement added.
LME said the decision on changes in its warehousing policy was made following a three-month market consultation that began in July.
"Implementation of the proposed changes to the warehousing policy will proceed as announced," HKEx said.
The upcoming changes in the world's largest and oldest metals marketplace come following intense regulatory and legal pressure over its storage system, with complaints about queues of more than a year and large surcharges to withdraw material from its warehouses.
The LME also said last month that it had given itself the power to act swiftly to prevent abuses of the system and it will have the authority to probe whether warehouses are manipulating flows of metal to create backlogs.
(Editing by Himani Sarkar)