How do LME warrants work?
LME warrants are a bearer documents of title to the metal. Futures contracts are settled or mature against LME warrants. To acquire a warrant you need to physically settle a long LME contract position – when the contract expires you get a warrant.
What is LME Cancelled warrants?
This information is an indicator of physical demand”. Metals on warrants represent inventories in store at the LME’s warehouse, while CWs imply metal earmarked for physical delivery soon. Investors cancel their warrants because they want to take it out of the LME warehouse.
What is LMEsword?
The LME operates a secure electronic transfer system for LME warrants called LMEsword. The LMEsword system facilitates the transfer of ownership of LME warrants and stock reporting. Warrants are held in a central depository, are produced to a standard format and include a unique barcode.
What is the purpose of LME?
The London Metal Exchange (LME) is the world centre for the trading of industrial metals. The majority of non-ferrous, on-exchange trading is conducted on our markets, with a growing presence in ferrous and precious metals.
What are warrants in commodities?
A warrant that gives the holder the right to receive a fixed quantity of a certain commodity (such as wheat, rice, gold, silver, oil, etc) at a fixed price. Such warrants are issued by the producers of commodities or by financial intermediaries.
What is Cancelled warrant?
If a warrant is issued in error, is lost or destroyed the issuing agency may cancel the warrant through the Agency Financial Reporting System (AFRS).
What is LME Select?
FAQs. LMEselect is the electronic member to member trading system. Its tradable hours are 01.00-19.00 for Base metals, 01.00-20.00 for Precious metals, Monday-Friday (London Time) with pre-trade and post-trade periods 00.45-01.00 and 19.00-19.30 (Base), 20:00-20:30 (Precious) respectively.
What Cancelled warrants?
Cancelled warrants are important in that they represent the change in stockpiles of metal that may no longer be available at LME warehouses and is booked for removal or onward shipment. This information is an indicator of physical demand.
What is LME and how it works?
The London Metal Exchange (LME) is a commodities exchange that deals in metals futures and options. It is the largest exchange for options and futures contracts for base metals, which include aluminum, zinc, lead, copper, and nickel. The exchange also facilitates trading of precious metals like gold and silver.
How does the LME ring work?
Ring sessions & trading times Each LME metal is traded in highly liquid five-minute Ring sessions which are themselves representative of global supply and demand. Trading on the Ring begins at 11.40 and closes at 17.00.
How are LME warrants allocated?
The allocation process of LME warrants against maturing LME contracts is known as clearing – the to-be owner of the warrant doesn`t know the brand and location of the metal until the day it’s actually allocated.
What is the best way to trade LME warrants?
Warrant traders usually have the best idea of the brand and location mix of warrants currently in the LME system. Warrants held by warrant traders are sold for a premium to the LME cash price and the buyer knows the location and brand upfront. Premium depends on brand and location.
What is the LME and how does it work?
LME contracts are quoted daily up to 3 months – a unique feature since most futures markets operate with monthly (crude oil) or seasonal (corn, soybeans) settlement conventions. Most end-consumers are familiar with the rolling LME cash and 3-months contracts. The cash price is widely quoted in physical market transactions.
Why do LME contracts have different delivery dates?
Because LME contracts were originally based on shipping dates as opposed to harvest months (as with agricultural commodities), LME uniquely adopted a system of daily delivery dates out to three months. This coincided with the approximate sailing times for copper from Chile and tin from Malaysia.