Independent directors beef up LME regulation - Business - News - The Independent

Independent directors beef up LME regulation

The London Metal Exchange is expected to beef up its board with more independent directors and set up new information-sharing arrangements with the Securities and Futures Authority, after the official report on the Sumitomo affair is published, probably next week.

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.

Life and Style
tech
Arts and Entertainment
Robin Thicke's video for 'Blurred Lines' has been criticised for condoning rape
music
News
Paper trail: the wedding photograph found in the rubble after 9/11 – it took Elizabeth Keefe 13 years to find the people in it
newsWho are the people in this photo? It took Elizabeth Stringer Keefe 13 years to find out
Voices
Yes supporters gather outside the Usher Hall, which is hosting a Night for Scotland in Edinburgh
voicesBen Judah: Is there a third option for England and Scotland that keeps everyone happy?
PROMOTED VIDEO
Arts and Entertainment
Matt Damon as Jason Bourne in The Bourne Ultimatum (2007)
filmMatt Damon in talks to return
News
peopleThe report and photo dedicated to the actress’s decolletage has, unsurprisingly, provoked anger
Arts and Entertainment
Evil eye: Douglas Adams in 'mad genius' pose
booksNew biography sheds light on comic genius of Douglas Adams
Life and Style
tech... and together they're worth at least £100 million
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig is believed to be donning skies as 007 for the first time
Arts and Entertainment
Fringe show: 'Cilla', with Sheridan Smith in the title role and Aneurin Barnard as her future husband Bobby Willis
tvEllen E Jones on ITV's 'Cilla'
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Bono and Apple CEO Tim Cook announced U2's surprise new album at the iPhone 6 launch
tech(but you can't escape: Bono is always on your iPhone)
Sport
Tim Wiese
sport
Life and Style
Kim Kardashian drawn backlash over her sexy swimsuit selfie, called 'disgusting' and 'nasty'
fashionCritics say magazine only pays attention to fashion trends among rich, white women
Arts and Entertainment
TVShows like Agents of S.H.I.E.L.D are little more than marketing tools
Arts and Entertainment
Hit the roof: hot-tub cinema east London
architectureFrom pools to football pitches, rooftop living is looking up
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Payroll & Accounts Assistant

£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Senior BA - Insurance **URGENT**

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week