SIB to seek changes at metal exchange

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The Independent Online
The Securities and Investment Board, the City regulator, will today recommend changes in trading practices at the London Metal Exchange in the wake of the Sumitomo copper scandal.

The SIB review began after it emerged in June that Japan's Sumitomo Corporation had run up losses of pounds 1.8bn (pounds 1.2bn) in unauthorised copper deals. Sumitomo, which is one of the world's largest copper dealers, blamed its chief trader, Yasuo Hamanaka, who was promptly sacked.

The news led to volatile copper trading on the LME, where the majority of trades take place. The SIB review covers metals and associated derivatives traded both on the LME and over the counter.

The SIB's investigation into Sumitomo and the LME was conducted in tandem with the Serious Fraud Office and the Commodity Futures Trading Commission of the US. Last week the SFO raided the English homes of two directors of Winchester Commodities, a metal trader.

Sumitomo expects that its own investigation will be completed within six months.