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Every lot of material, for which a warrant is issued, is held in an LME-approved warehouse. The warrant gives right of possession to the specific lot of material against which it was issued. The warehouse companies, acting through their agents in London, issue warrants. The LME has many different warehouse locations and the delivery of warrants is at the seller's option.
In January 1999 the LME and the London Clearing House launched a joint initiative called SWORD that became fully operationaly in July 1999.
SWORD is a secure electronic transfer system for LME warrants which can now be held in a central depository. All LME warrants are produced to a standard format with a barcode. Warehouse companies issuing these warrants ensure that the details are known to SWORD which acts as a central database, holding details of ownership and is subject to stringent security controls. The ownership of LME warrants can be transferred between SWORD members in a matter of seconds and all rent payments are automatically calculated.
SWORD brings a number of benefits, particularly in administrative efficiency by removing the physical transfer of warrants and the manual operations that involved. It also reduces the number of times a warrant has to be passed by hand, as warrants no longer need to be physically transferred from owner to owner every time the material is bought or sold.
LME Rules and Regulations
To purchase a copy of the London Metal Exchange Rules and Regulations, contact +44 (0) 20 7264 5555.
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