LME gears up for warehouse deliveries review

LONDON Aug 1 (Reuters) - The London Metal Exchange (LME) has taken the first step to carry out a formal review into deliveries from the warehouses it monitors, it said on Wednesday, as it mandated a new daily out-flow rate for nickel and tin.

The LME's warehousing operations have been dogged by controversy since big banks and trading houses including Goldman Sachs and JP Morgan Chase bought warehousing operations.

LME regulations allow companies operating warehouses in the global network registered by the exchange to release a fraction of their inventories each day, leading to long queues to collect metal.

The LME announced an increased minimum load-out rate for its warehouses last year, which came into effect this year. It said at the time it would carry out a six-month review of that poliy.

In a notice to LME members on Wednesday, LME Chief Exeuctive Martin Abbott said that in preparation for that review, the exchange had reconvened a steering committee. The team consists of Abbott, Deputy Chief Executive Diarmuid O'Hegarty and head of physical operations Robert Hall.

The announcement comes a week after LME shareholders voted in favour of a 1.4 billion pound takeover offer from Hong Kong Exchanges and Clearing Ltd.

Clients of the exchange - the world's biggest marketplace for industrial metals - wait in queues to collect metal from warehouses, all the while paying rent to warehouses. The warehouse operators blame logistical bottlenecks for delays but critics say it is a tactic to increase rental income.

The LME said in April it would delist the Dutch port of Vlissingen as a registered delivery point for copper due to long queues at the already congested warehouses.

It said on Wednesday warehouses will need to deliver out at least 60 tonnes of nickel and tin per from April 1 next year.

The LME proposed those changes in April, saying there was concern that deliveries of tin and nickel were being caught in queues which was having an impact on the availability of those metals.

A spokeswoman for the LME said that new policy was a tailored response for nickel and tin.