* LME acknowledges "very significant" polarisation of opinions
* LME to act on incentives warehouses offer to traders
* 50-day queue threshold to remain under constant review
By Maytaal Angel and Susan Thomas
LONDON, Nov 7 (Reuters) - The London Metal Exchange, aiming to appeasecritics of its global storage network, on Thursday slashed queues for metal,beefed up its powers to act against market abuse and will review its agreementwith warehouse owners.
The world's largest and oldest metals marketplace is under intenseregulatory and legal pressure over its storage system, with complaints aboutqueues of more than a year and large surcharges to withdraw material from itswarehouses.
The crisis has drawn scrutiny from British and U.S. regulators andcomplaints from industrial users, including beer and can maker MillerCoors LLCand Novelis, which manufactures sheet used to make drinks cans.
The LME proposed new rules in July to overhaul its delivery system from nextApril that would force warehouses to release more stocks once the wait timebreaches 100 days.
Its new plan has cut that to 50 days and the LME said it would keep thatfigure "under active review".
The exchange also said it had given itself the power to act swiftly toprevent abuses of the system and it will have the authority to probe whetherwarehouses are manipulating flows of metal to create backlogs.
LME Chief Executive Garry Jones said the exchange was determined to pressahead with the changes, despite a trickle of early criticism of the new rules.
"There may well be legal challenges but we are going ahead as planned,"Jones told a news conference at the 136-year-old exchange's headquarters onLeadenhall Street in the City, London's financial district. "We are not going tohang back from the process."
Britain's regulatory watchdog, the Financial Conduct Authority, said theLME's new plan was a step towards increasing transparency in the metals market.
The LME acknowledged, however, that there was "a very significantpolarisation of opinion" on the issue. Industry insiders were also divided onthe outcome.
"The overall plan sounds like a very reasonable step. But some people willbe very unhappy because it takes the floor out of their business model," asenior metals industry source said.
A second industry source said: "They have turned the supertanker around andpointed it in the right direction. This is unequivocally going to reduce metalin bottleneck locations in the LME. The bottlenecks are so large, and thewarehouses are so full it's going to take us a long time to get to thatdestination."
Customers and U.S. lawmakers have accused warehouse owners, includingGoldman Sachs, JPMorgan Chase & Co, Glencore-Xstrata andTrafigura, of artificially inflating waiting times and lines to boost rents forwarehouse owners and cause metal costs to rise.
MillerCoors, a major customer, has estimated the delays have cost consumersmore than $3 billion.
"Frankly I think it (the plan) is a very good paper," a third seniorindustry source said. "The only problem is that it begs the question, why hasthe LME maintained for years that there wasn't a problem."
Warehouse owners and former LME CEO Martin Abbott have said the complaintsover long lines are unjustified, arguing there is no shortage of metal.
Instead, they have said the long lines have been created by traders tryingto move metal to rival warehouses that are offering financial incentives in abid to boost their own rental income.
Goldman Sachs and Glencore declined to comment on the LME's new plan.JPMorgan, which is in the process of selling its physical commodities assetsincluding its warehousing business, also declined to comment.
Trafigura's head of non-ferrous and bulk commodities, Simon Collins, saidthe trade house welcomed the LME's "bold reforms to its warehousing policy".
The LME also said it had started a legal review of what steps it can take onhigh storage charges including rent, and is looking with lawyers at theeffectiveness of the agreement it has with warehouse companies.
The LME urged warehouses to show self-discipline in terms of rents, butwarned the firms it would consider using its new powers to cap rents if theywere hiked in response to the new rules.
Novelis Chief Supply Chain Officer Nick Madden, one of the LME's fiercestcritics, welcomed the plan. "At first review, the rule changes outlined by theLME appear to be a significant step in the right direction," he said.
But some say 50 days is still too long to wait for metal.
"Any day over one day is a disgrace to a free market," metals trader AnthonyLipmann said.
"There is no proportion of days for getting your titled goods that you ownfrom a warehouse that is right beyond immediate delivery. The metal trade forits safe and orderly function requires nothing less than immediate delivery."