The London Metal Exchange (LME) today announces the successful launch of LMEshield, the new electronic warehouse receipt system for the global commodities market. The first receipt was issued by Henry Bath & Son Ltd on behalf of BNP Paribas Arbitrage SNC.
LMEshield is a custody tool that issues and manages electronic receipts relating to commodities stored off-warrant in a range of global locations. At go-live, LMEshield is available in 19 jurisdictions, including countries new to the LME storage network such as India, South Africa and Chile.
“We recognise that there is a need for a reliable standard for warehousing worldwide,” says Matt Chamberlain, Head of Business Development at the LME. “We are pleased to be able to extend the LME’s experience in secure warranting beyond the LME network to improve confidence in global warehousing, provide protection against fraud and expand the market for commodities financing.”
The LME is grateful for the support of the warehouses, metal traders and financing banks that participated in consultation on the design and deployment of the LMEshield system, including:
- BNP Paribas Arbitrage SNC
- CWT Commodities (Metals) Pte Ltd
- Goldman Sachs International
- Henry Bath & Son Ltd
- Independent Commodities Logistics BV
- Louis Dreyfus Company Metals Suisse SA
- Metro International Trade Services LLC
- Pacorini Global Services (Spain) SAU
- Société Générale SA
- Standard Chartered Bank
- Vollers Group GmbH
LMEshield has been developed in partnership with software provider Kynetix. Hosted on a cutting-edge new platform and featuring a highly efficient print-in-depository receipting model, it is based on the same robust operating principles as the LME’s existing warrant-transfer system, LMEsword, which monitors stocks related to deliveries made on the LME market. The new system is available to LME members and non-members alike.
The LME has ambitious plans to expand the LMEshield network, and further eligible jurisdictions and commodities will be added in due course.
Notes for editors
More about LMEshield, including a video explaining how the system works, can be found on lme.com/lmeshield.
LMEsword is the LME’s warrant management system, which accounts for more than 4 million tonnes of metal around the world.
The LME last month entered into a strategic alliance with Henry Bath & Son Ltd, CMST Development Co Ltd and Mercuria Energy Trading to list warehouses for LMEshield in regions along China’s ‘The Belt and Road’ routes.
About the London Metal Exchange
The London Metal Exchange, a member of HKEX Group, is the world centre for industrial metals trading.
More than three quarters of global non-ferrous metals business is conducted on our three trading platforms: LMEselect (electronic), the Ring (open outcry) and the 24-hour telephone market. The world’s metal community uses the LME to trade futures and options, and to hedge against adverse price movements. Prices that are discovered on our markets are used as the global reference prices.
Participants can trade aluminium, aluminium alloy, copper, tin, nickel, zinc, lead, molybdenum, cobalt, steel billet, steel rebar and steel scrap, and four regional aluminium premiums contracts. In 2015, 170 million lots were traded on the LME, the equivalent of 4 billion tonnes and $12 trillion in notional value.
Founded in 1996, Kynetix is a leading provider of specialist technology solutions for physical commodities markets including inventory management and physical deliveries. A veteran of the financial services industry, Kynetix has worked with some of the largest global commodities exchanges and their members, identifying areas to improve efficiency and reduce risk through innovative technology solutions.