LME warrants are documents that represent an entitlement to a specific lot of LME-approved metal. Warrants can only be issued if the underlying metal conforms to the quality requirements details specified by the LME, so as well as an ownership document, a warrant also acts as a form of insurance against the quality of the metal a buyer will receive.
Following feedback from and engagement with industry stakeholders, the LME has streamlined the warrant lodgement and withdrawal process by introducing a new dematerialised (electronic) warranting process. Since 1 March 2021, instead of physical paper warrants, all LME warrants are digital*. The LME will act as depository, holding rights in the warrant and, where relevant, immobilised warrant (as well as rights in the underlying metal) on behalf of the account holder in LMEsword.
These changes bring significant operational efficiencies for users – including, for example, the removal of volume limits for warrant processing, the reduction in risk of physically transporting paper warrants to and from the depository vault and the associated costs involved in these manual processes.
*Apart from warrants relating to metal located in South Korea – these will be printed, but immobilised, in the LME Depository.