London 14/07/2016 - The London Metal Exchange will not consult on a FOT conversion as part of its warehouse reform due to lack of appetite for its proposed changes, it confirmed.
"Many respondents shared the LME’s concerns with the difficulties of implementing such a significant change into the established LME ecosystem, a change which would fundamentally alter the economics of trading and storing metal on the LME network," it said in a release on Thursday, adding that the practical difficulties would outweigh the benefits.
Instead, the exchange believes it is more appropriate and ultimately less restrictive to focus its attention on headline warehousing charges specifically.
Market participants did not expect the exchange to push ahead with changes, FastMarkets reported earlier, believing they would be too difficult to implement and were not in the market's interest.
FOT Conversion (FOTC) is the conversion of the LME contract from an "in warehouse" contract (where the buyer pays the FOT charge) to an "FOT-paid" contract (seller pays FOT).
(Editing by Mark Shaw)