* New 60-day rent charge limit to move stock
* Information required to justify warehouse charges
* Changes effective from April 1
By Sarah McFarlane
LONDON, Jan 28 NYSE Liffe has revised
its cocoa and coffee grading and storage rules to impose limits
on how long warehouses can charge rent when delivery or transfer
of stock is delayed, a document published on its website showed.
Warehouse storage rents and load-out rates have sparked
debate since the coffee and cocoa markets began copying
controversial business models used in the metals markets. Metals
warehouses have collected rents as delivery of physical supplies
has been delayed for months.
Exchanges are taking action after hoarding activity has gone
on for at least two years in coffee. Regulators have already
stepped in to look at metals warehousing in Europe, and the
exchanges are moving before regulators train their spotlight on
the soft commodity markets as well.
The exchange's new rules, which become effective on April 1,
force warehouses to stop charging rent for goods that have not
been moved within 60 days after a request is made and require
additional information to justify warehouse charges.
"Up until recently the pace you could get the goods out,
whether it be coffee or cocoa, has been too slow to be
commercially viable," said Jonathan Parkman, joint head of
agriculture at brokerage Marex Spectron.
"By the introduction of this latest rule where warehouses
will have to effectively move out all the coffee or cocoa within
60 days, that greatly increases the commercial flexibility for
those taking delivery."
Also under the new rules, warehouse keepers must inform the
exchange of their maximum loading-in, weighing, sampling and
"Additional criteria will be introduced as part of the
application/renewal process, which will require warehouse
keepers to justify to the exchange that the proposed rates are
reasonable and comparable with commercial charges levied for
similar services," the notice said.
Traders and end-users said the additional information on
rates and the 60-day limit were steps in the right direction,
although they would prefer an even shorter time limit on the
movement of goods.
"If I take delivery of a product, I think it should be
available within 30 days," a European coffee roaster said.
"They are taking good steps to increase transparency on
The changes follow Intercontinental Exchange's acquisition
of NYSE Liffe, including the London-based cocoa and robusta
coffee contracts in November, and will align Liffe's grading and
warehouse keeping procedures with those of ICE.