WASHINGTON, June 23 The U.S. commodities
regulator will have to carry out a review of metals warehousing
if a bill before the U.S. House of Representatives is passed,
the latest sign of intensive political pressure in the United
States over the controversy at the London Metal Exchange.
Representative Bob Goodlatte, who chairs the House Judiciary
Committee, urged the CFTC to take a tougher stance on the London
Metal Exchange when the House Committee on Agriculture
in April approved a bill reauthorizing the agency's mandate.
The LME is struggling to resolve a years-long controversy
after complaints from brewers - who use aluminum for beer cans -
and other companies that excessive stockpiling by Wall Street
banks was inflating prices.
The text of the bill has now been amended to include
Goodlatte's request for a study by the CFTC on how it oversees
metals markets, specifically to compare the rules for foreign
and domestic exchanges.
The fact that the legislation addresses the issue shows the
continuing pressure on the warehousing business by politicians,
even if the bill stands little chance of making it through
Congress against opposition from President Barack Obama.
The LME is regulated in Britain by the UK's Financial
Conduct Authority, while the CFTC holds sway over its U.S.
The LME has largely been exempt from the CFTC's rules since
2001 but is now seeking to register with the agency as a
so-called foreign board of trade.
The House is scheduled to discuss the bill late on Monday,
and to vote on it a day later.
Complaints of inflated prices, which have plagued the
industry for years, captured public and political attention last
year, with much of the charge led by Senator Sherrod Brown, an
Ohio Democrat critical of large banks.
(Reporting by Douwe Miedema)