LME outlines proposed new rules on position limits

The London Metal Exchange (LME) on Monday outlined plans for new rules on position limits from July next year to comply with a directive from Britain’s financial regulator.

The Financial Conduct Authority currently sets and administers position limits in commodity derivatives to prevent market manipulation and abuse. But responsibility for this will pass to the trading venues themselves from July 6, 2026.

“This will strengthen the LME’s ability to calibrate and manage limits directly, ensuring they remain appropriate and responsive to market dynamics,” the LME, the world’s primary metals marketplace, said in a statement.

The new rules will apply to “critical contracts” – in the bourse’s core aluminum, copper, lead, nickel, tin and zinc futures offerings – as well as “related contracts”, including options and Trade at Settlement contracts, the statement said.

Proposed changes include calculating positions on a net basis at an individual entity and group level, and replacing the current accountability levels with accountability thresholds to give the LME a “more holistic view of exposure,” it added.

The exchange will issue a consultation paper on the proposed rule changes in February.

“We are keen that members and clients have plenty of time to understand the changes and encourage stakeholders to share their views on our plans,” said LME chief operating officer Jamie Turner.

(By Polina Devitt and Tom Daly; Editing by Bernadette Baum and Kirsten Donovan)