Finance
LME launches consultation for proposed rules on position limits
Published by Global Banking & Finance Review®
Posted on February 27, 2026
2 min readLast updated: February 27, 2026
Quick Summary
The LME has opened a consultation on rule changes for commodity-derivatives position limits ahead of the UK’s handover of limit-setting from the FCA to trading venues on 6 July 2026. The move follows the FCA’s PS25/1 reforms and is intended to give the LME fuller visibility of market exposures, incl
LME opens consultation on proposed position limits rules ahead of July 6 shift
Consultation on proposed LME position limits rule changes
Regulatory backdrop and July 6 transition
LONDON, Feb 27 (Reuters) - The London Metal Exchange (LME) on Friday issued a consultation paper on proposed changes to rules on position limits 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 this responsibility will pass to the trading venues themselves from July 6.
"The new regime will give the LME greater insight into positions across the market and an ability to calibrate and manage position limits directly," the LME, the world's primary metals marketplace, said on Friday.
Prior announcement and consultation details
It first outlined the plan in December.
Compliance costs and market impact
"The LME acknowledges that there may be costs in complying, or otherwise in connection, with the proposals set out in this consultation," it said in the 149-page paper.
"However, the current view of the LME is that the proposals are justified as they are in the interests of the wider market and would strengthen LME markets."
Response deadline
The consultation will be open for responses until 6 p.m. (1800 GMT) on March 27.
Source and credits
(Reporting by Polina DevittEditing by David Goodman and Tomasz Janowski)
Key Takeaways
- •Regulatory shift: FCA policy PS25/1 confirms that from 6 July 2026 UK trading venues (including the LME) will set/administer position limits, exemptions and related controls—moving away from the FCA-run model. (fca.org.uk)
- •Market impact: LME says the new regime should improve its ability to calibrate limits using broader position insight (including OTC-linked exposures) and plans to apply new controls across “critical” core metals contracts and related instruments (eg, options and TAS). (lme.com)
- •Compliance and divergence: The UK approach is designed to be more venue-led and flexible post-FSMA 2023, and commentators expect further UK–EU divergence as EU national regulators retain primary responsibility for position limits. (legislation.gov.uk)
References
Frequently Asked Questions about LME launches consultation for proposed rules on position limits
1What did the LME issue regarding position limits?
The LME issued a consultation paper on proposed changes to its rules on position limits to comply with a directive from Britain’s financial regulator.
2Who currently sets and administers position limits in commodity derivatives?
The Financial Conduct Authority (FCA) currently sets and administers position limits in commodity derivatives to prevent market manipulation and abuse.
3When will responsibility for position limits move from the FCA to trading venues?
This responsibility will pass to the trading venues themselves from July 6.
4What did the LME say the new regime would allow it to do?
The LME said the new regime will give it greater insight into positions across the market and an ability to calibrate and manage position limits directly.
5When does the LME consultation close for responses?
The consultation will be open for responses until 6 p.m. (1800 GMT) on March 27.
