24 JULY 2013www.euronews.com
MillerCoors urges more oversight of LME in Senate testimony
Edited by : AL CIRCLE
2 min read
MillerCoors LLC has urged U.S. lawmakers and regulators to press for greater regulatory oversight of the London Metal Exchange, the world’s largest metal market, after years of inflated aluminium prices that have cost the industry billions of dollars.
“We simply ask for the same regulatory and legislative oversight of the LME that other U.S. futures exchanges receive,” Tim Weiner, global risk manager for the brewer, said in a submission sent to the U.S. Senate banking committee on Monday.
That would level the playing field and ensure transparency for both buyers and sellers of metal, he said in the statement which he will present on Tuesday at a hearing on Wall Street banks’ ownership of physical commodity assets.
His comments come as regulatory scrutiny of banks’ ownership of physical operations from metals warehousing to power plants intensifies.
In metals, industrial users say the impact of banks’ involvement in their industry has been particularly acute.
Record high physical aluminium prices have cost the Chicago-based brewer tens of millions of dollars in recent years and increased expenses for aluminium consumers by some $3 billion (1 billion pounds) last year, he said. MillerCoors buys flat-rolled aluminium to make beverage cans and bottles for its beer.
In the past three years, a mountain of aluminium and other metals has accumulated in the global warehouses that are part of the LME network, clogging the trading system and causing lengthy queues – up to a year – as consumers and dealers of the metal seek to get their hands on it.
The queues have caused the price premium on some metals, such as aluminium and zinc, to surge, prompting accusations that banks and traders that own storage facilities are artificially inflating prices and distorting supplies.
Weiner said he has complained to the LME as well as regulators in the United States, United Kingdom and the European Union about the issue which has vexed the exchange for the past four years.
The LME “dismissed” his proposals to ease wait times and the U.S. and UK regulators told him they were not certain about their regulatory authority over warehousing, Weiner added.
The LME is regulated by the UK’s Financial Conduct Authority.
MillerCoors will make more than 60 million barrels of beer in the United States this year.
“We simply ask for the same regulatory and legislative oversight of the LME that other U.S. futures exchanges receive,” Tim Weiner, global risk manager for the brewer, said in a submission sent to the U.S. Senate banking committee on Monday.
That would level the playing field and ensure transparency for both buyers and sellers of metal, he said in the statement which he will present on Tuesday at a hearing on Wall Street banks’ ownership of physical commodity assets.
His comments come as regulatory scrutiny of banks’ ownership of physical operations from metals warehousing to power plants intensifies.
In metals, industrial users say the impact of banks’ involvement in their industry has been particularly acute.
Record high physical aluminium prices have cost the Chicago-based brewer tens of millions of dollars in recent years and increased expenses for aluminium consumers by some $3 billion (1 billion pounds) last year, he said. MillerCoors buys flat-rolled aluminium to make beverage cans and bottles for its beer.
In the past three years, a mountain of aluminium and other metals has accumulated in the global warehouses that are part of the LME network, clogging the trading system and causing lengthy queues – up to a year – as consumers and dealers of the metal seek to get their hands on it.
The queues have caused the price premium on some metals, such as aluminium and zinc, to surge, prompting accusations that banks and traders that own storage facilities are artificially inflating prices and distorting supplies.
Weiner said he has complained to the LME as well as regulators in the United States, United Kingdom and the European Union about the issue which has vexed the exchange for the past four years.
The LME “dismissed” his proposals to ease wait times and the U.S. and UK regulators told him they were not certain about their regulatory authority over warehousing, Weiner added.
The LME is regulated by the UK’s Financial Conduct Authority.
MillerCoors will make more than 60 million barrels of beer in the United States this year.
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