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The Exchange operates a secure electronic transfer system for LME warrants called LMEsword.
The LMEsword system facilitates:
- Transfer of ownership of LME warrants; and
- Stock reporting.
All warrants are held in a central depository, are produced to a standard format and include a unique barcode. The London agents of listed warehouse companies who issue these warrants must record all details of the warrant in LMEsword.
LME member firms who hold a net outstanding short position in an LME contract on the settlement date must make warrants available via LMEsword to settle their obligations. Those with an outstanding long position receive warrants via the LMEsword system.
The efficient transfer of warrants using LMEsword is an important part of driving price correlation with the physical market.
Owners of warrants can also LMEsword to quickly and easily transfer title to material held on warrant to facilitate stock financing and other commercial arrangements.
As a terminal market for the materials that are traded on the LME, the amount of material held on warrant in LME warehouses is often used as an indicator of the underlying supply and demand situation for a material. LMEsword provides a fast and efficient mechanism to monitor stock levels.
Detailed stock level reports are produced and distributed each day by LME market data vendors.
Stock reports produced by LMEsword are a key part of operating an orderly and transparent market.
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