The London Metal Exchange (LME) has today published an update setting out its approach to position management and how it intends to implement the Financial Conduct Authority’s (FCA) new regime on commodity market position limits.

The update provides stakeholders with a comprehensive view of the LME’s understanding of the new regime and how the changes will be incorporated in the LME’s Rules.

The FCA published Policy Statement 25/1: “Reforming the commodity derivatives regulatory framework” (PS25/1) in February 2025. PS25/1 confirmed significant changes to the rules for trading venue operators like the LME. From 6 July 2026, responsibility for setting and administering position limits, exemptions and other position management controls will transfer from the FCA to the LME.

This will strengthen the LME’s ability to calibrate and manage limits directly, ensuring they remain appropriate and responsive to market dynamics.

The new rules will apply to “critical contracts” (in the LME’s core futures contracts: aluminium, copper, lead, nickel, tin and zinc) as well as “related contracts” (which will include options, TAPOs and Trade at Settlement (TAS) contracts).

Proposed changes set out in the paper include:

• An indicative calibration of the future position limits, together with exemptions to those limits and an overview of the process for applying for an exemption.
• Positions will be calculated on a net basis at an individual entity and group level.
• Replacing the current accountability levels with accountability thresholds that will give the LME a more holistic view of exposure and will apply to the spot month, other months and a maximum cumulative position across all prompt dates and expiries.
• An obligation for members to report their own positions as well as those of clients, up to the ‘end client’.

Jamie Turner, LME Chief Operating Officer and Head of Trading, said:

“The LME will incorporate the FCA’s new requirements into its existing position management controls. They will give us greater flexibility to ensure that the position limits are tailored to our market and work with our existing, comprehensive set of controls.

“We are keen that members and clients have plenty of time to understand the changes and encourage stakeholders to share their views on our plans.”

The LME intends to issue a consultation paper on proposed rule changes to accommodate the new regime in February 2026.