Foreign media reported on February 23 that the London Metal Exchange announced last Friday that it will implement permanent restrictions on members holding large positions in near-month contracts. This rule, initially introduced temporarily last June, has now become permanent after consultation with members and widespread support.

The LME stated that market participants generally believe that rules-based solutions implemented in a fair and consistent manner will bring stability, transparency, and confidence to the market.

Under the new regulations, long positions exceeding the limit must be sold back to the market at zero premium. This measure was introduced in June last year when declining inventories, coupled with large positions in near-month contracts concentrated in a few companies, led to a surge in the premium for near-month copper contracts. At that time, the LME Special Committee instructed market participants to reduce large positions to prevent potential market "squeezing" or "unfavorable situations."

Since then, the premium for near-month copper contracts has fallen and turned into a discount, while inventory levels have rebounded.

As the world's oldest and largest industrial metals market, the implementation of this permanent rule marks a significant upgrade to the LME's risk management framework.

Analysts believe this move will help curb market manipulation and ensure the smooth operation of the metals futures market. The LME is currently owned by Hong Kong Exchanges and Clearing Limited.

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