LME halts plan to cut metals queues after court ruling

March 27, 2014 11:41 am

LME halts plan to cut metals queues after court ruling

By Xan Rice

The London Metal Exchange has been forced to halt plans to reduce queues at its global warehouse network after a UK High Court judge ruled that its industry consultation was “unfair and unlawful”.

The case was brought by Rusal, the world’s largest aluminium producer, which argued that the rules due to take effect on April 1 would cause the metal price to fall and cost it tens of millions of pounds.

The regulations aimed to cut LME warehouse queues to 50 days after consumers complained that logjams to load out metal had artificially increased the price of aluminium, used in everything from beverage cans to automobile bodies.

Rusal sought a judicial review on three grounds: procedural unfairness, failure to undertake a sufficient inquiry and a breach of its human rights.

The judge said: “I have found the LME’s consultation to have been unfair and unlawful on the first two grounds advanced by Rusal.” And then he added that the third ground was “plainly arguable”. He set aside the LME decision to implement the new rules.

Oleg Deripaska, chief executive of Rusal, said: “We welcome this decision by the High Court and look forward to working closely with the LME, and indeed all key stakeholders, to ensure that the revised consultation period and subsequent rule changes serve to increase the integrity of price discovery and transparency across the market, which we believe are the key issues continuing to face the sector.”

In a statement the LME said it was disappointed with the decision.

“We continue to believe that Rusal’s complaint was without merit in its entirety and are currently taking legal advice with regard to our options, including appeal or re-consultation. Accordingly, the implementation of the linked load-in, load-out rule change will not take place on April 1 2014 as previously scheduled,” it said.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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