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2026-02-21 00:55:34
[LME Permanents Position Lending Rules to Combat Market Squeeze] On February 20, the London Metal Exchange (LME) officially announced that it will permanently implement a complete set of rules used to constrain the impact of large trading positions, aiming to smooth out large price fluctuations in metals such as aluminum. Under the new rules, if a holder holds a position exceeding 50% of the available inventory in the LME's warehouse system within one month before the contract expires, they must lend the position to other buyers at a capped interest rate (low price or zero cost) until the position ratio falls below 50%. Compared to the temporary version introduced in 2025, the new rules not only broaden the scope of application but also include near-month options positions in the regulatory framework. This move is a response to large traders such as Mercuria, Vitol, and Gunvor accumulating huge positions in the aluminum market, sometimes exceeding available inventory.
