By Ashitha Shivaprasad LONDON, Oct 10 (Reuters) – The London Metal Exchange (LME) is considering a market consultation to amend rules for the 450 warehouses in its network around the world, its Chief Executive Matt Chamberlain told Reuters. More than a decade ago, the LME introduced queue-based rent capping (QBRC) rules which limit the rental income of registered warehouses to 80 days after the firm that owns the metal has given notice of intention to take delivery. But the rule has had unintended consequences. Traders with contracts to deliver metal to customers beyond 80 days cancel warrants to get free storage, while consumers are prevented from getting metal in warehouses with queues when they need it. "We recognise there are always views on how things like load-out rates, rents, etc., operate," Chamberlain said ahead of LME Week, a gathering of the global metals industry in London. "We have very active conversations with stakeholders…and when it makes sense to go to market with specific ideas, whether suggested to us or developed internally, we would put that into a consultation at the appropriate time." Reuters reported earlier this year that the LME was planning a consultation on its warehousing rules. Sources said one alternative to QBRC would be to stipulate percentages of metal that would have to leave the warehouse, or be loaded out, within a certain period. Other changes could include banning so-called "rent deals" that allow warehouses to share rental income with companies that deliver metal to them, they said. The firm that delivers the metal to a warehouse does not have to retain ownership under the rent deals, but still gets a share of the rent as long as the metal stays in the warehouse, and the fees are paid by the new owners of the metal. Despite these measures, queues reappeared last year, raising fresh concerns about the effectiveness of the current system. The LME is owned by Hong Kong Exchanges and Clearing Ltd. . (Additional reporting by Eric Onstad; editing by Pratima Desai, Kirsten Donovan)
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