UPDATE 1-LME confirms plan to freeze warehouse rental rates for five years

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LONDON, Sept 28 (Reuters) - The London Metal Exchange (LME) adopted the final reform on Wednesday to its global network of approved warehouses by freezing maximum rental rates for five years to curb surging costs.

The move was the latest in a three-year series of reforms at the 139-year-old exchange’s global network of more than 600 warehouses at 37 locations, which have included tough rules to slash delivery backlogs.

“The LME has a duty to the entire metals community to run a fair and orderly market and the action we have taken over the last three years has strengthened our ability to carry out this responsibility,” LME Chief Executive Garry Jones said in a statement.

The exchange, the world’s oldest and largest market for industrial metals, had unveiled the plans to cap rents and free-on-truck charges (FOT) in July, which will be implemented next April.

The LME, owned by Hong Kong Exchanges and Clearing Ltd. , said it will calculate the average of the highest-published warehouse rental and FOT charges for the past two years for each metal and each country.

The LME has previously said that the average stock-weighted increase in rents this year was 7 percent, against 3 percent in the previous two years. FOT charges rose by 9 percent, up from 2 percent for the past two years.

The exchange added that once the freeze ended, rates would rise annually based on the consumer price index in each country. (Reporting by Eric Onstad and Maytaal Angel; Editing by Adrian Croft and Alexandra Hudson)