Finance
LME plans permanent rules restricting large-position holders
Published by Global Banking & Finance Review®
Posted on October 30, 2025
2 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on October 30, 2025
2 min readLast updated: January 21, 2026
The LME plans permanent rules to restrict large-position holders due to low inventory levels, aiming to maintain orderly markets. Consultation is open until November 21.
By Eric Onstad
LONDON (Reuters) -The London Metal Exchange (LME) said on Thursday it plans to set permanent rules that impose restrictions on members with a large positions in nearby contracts amid low inventory levels.
The world's oldest and largest market for industrial metals, which is owned by Hong Kong Exchanges and Clearing Ltd., imposed temporary restrictions in June after premiums for nearby copper contracts jumped.
The LME said these were introduced in response to the low-stock environment combined with large positions held in nearby dates, which had prompted the LME's Special Committee to direct market participants to reduce large on-exchange positions.
Recently, premiums for nearby zinc have soared to record levels after inventories slid by about 85% so far this year.
MAINTAIN ORDERLY MARKETS
"The LME believes that having a permanent rule that applies to the whole market to deal with market participants with significant positions in nearby prompt dates is the most appropriate measure to maintain orderly markets," it said.
The LME said in June that actions had been taken to head off the development of a potential "corner" on the market or an "undesirable situation".
The restriction requires holders of long positions which are greater than the total stocks levels to lend back to the market at a zero premium, the LME said in a statement on Thursday.
The new rule also expands existing restrictions on so-called "tom-next" positions that are closer to delivery, it added.
In zinc, the premium for the cash contract over the three-month forward hit a record of $339 a metric ton last week, but had dropped to $133 on Wednesday.
The LME said a consultation would be open until November 21.
(Reporting by Eric Onstad; Editing by Bernadette Baum and Alexander Smith)
The London Metal Exchange (LME) is the world's oldest and largest market for industrial metals, facilitating trading and price discovery for various metal commodities.
Large-position holders are market participants who hold significant quantities of a commodity or financial instrument, which can impact market prices and liquidity.
Nearby contracts refer to futures or options contracts that are set to expire soon, typically within a short time frame, affecting immediate market conditions.
A consultation period is a designated timeframe during which stakeholders can provide feedback on proposed regulations or changes before they are finalized.
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