But the LME is thought to have lost a campaign to require all metal traders in London to become members of the exchange.
Sumitomo and some of the traders through which it dealt were not members of the LME and were outside its regulatory control when Yasuo Hamanaka, the Japanese company's rogue trader, ran up copper losses of $2.6bn in the spring.
Some copper traders such as Winchester Commodities were, however, registered by the Securities and Futures Authority, the securities market regulator.
The report by the Securities and Investments Board, the senior City regulator, was begun after a request in June from Raj Bagri, chairman of the LME, shortly after the copper scandal came to light.
Mr Bagri said yesterday: "We find it incongruous that under the Financial Services Act people can trade millions of tonnes of metal without needing to be members of the LME. They can be just members of the SFA."
However, under existing legislation the SFA cannot require a trader to join the LME. Mr Bagri said he believed it was essential that the Act should be changed but conceded that there would be a problem finding parliamentary time.
In the absence of changes in the Act, the best alternative would be to obtain information on copper trading businesses and their staff from the SFA and "exercise jurisdiction via the SFA", he said.
Mr Bagri added that the LME had made clear to the SFA several years ago that it would like access to more information about copper market participants who were not exchange members.
Mr Bagri, who was re-elected chairman for a fifth term on Wednesday, said four of the 16 directors of the LME were "invited" members and one of these was independent of the metals industry. The total of invited directors would be increased to five or six and at least half of this category would be independents.
Other changes at the LME will include a substantial increase in its present secretariat of 45 as part of a drive to toughen market surveillance, information reporting, compliance and monitoring in the wake of the Sumitomo affair.
The SIB report is expected to recommend a tightening of the LME's rulebook and it is also certain to back international moves this autumn to improve co-operation among regulators, including the Windsor accord which agreed new information-sharing arrangements.
There is no suggestion that large international copper dealers such as Sumitomo should be brought inside the London regulatory framework, which would be impractical. The drive to prevent future scandals is concentrating on improving the links between regulators to ensure information is exchanged and warnings are acted on.
LME questions about Mr Hamanaka's activities several years ago were ignored by the company and the Japanese authorities.
The rulebook will be strengthened to allow the market authorities to obtain more information from members on their own and their clients' business dealings. Members will be pressed to give more information on over- the-counter business, outside the exchange.Reuse content