A Project Report on Fizz- London Metal Exchange
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Date
2017-08-31T13:29:31Z
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Abstract
LME Warrants are paper certificates that represents ownership of a specific parcel of
metal that is of the correct quality in a given shed/region.
These warrants are generally stored in a secure depository and transferred via the LME
SWORD system. The weight of the parcel is +/-2% of the defined contract size.
EXAMPLE: Aluminium which is a 25 metric tons contract the weight of the parcel
can be 24.5 – 25.5 metric tons.
Ownership of a LME Warrant is transferred by being long or short the futures position and
allowing the position to go to delivery.
For on-exchange or listed positions the warrant ownership will transfer with the
exchange known as a cleared transaction.
For OTC or off-exchange positions the warrants ownership will be with a specific
counter party known as an ex-cleared transaction.
The LME is a physically delivering market:
When a user takes a physical delivery of metal they will receive a random allocation
of metal in any combination of the LME approved warehouses globally.
The metal received can have a weight difference of +/-2% of the LME’s actual
contract specification.
Each LME Warrant issued is for 1 lot of metal.
Ownership of LME approved physical metal is reflected with a certificate of ownership that
is called an LME Warrant.
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Fizz- London Metak Exchange, Joyson Jayaraj, 1NH14MCA40