Delivery Dates Daily for cash to 3 months (first
prompt date two working days from
cash). Then every Wednesday from
3 months to 6 months. Then every
third Wednesday from 7 months
out to 63 months
Quotation US dollars per tonne
Minimum Price Movement 50 US cents per tonne
Clearable Currencies US dollar; Japanese yen;
sterling; euro
Source: LME.
Delivery against LME contracts is in the form of LME warrants,
which are bearer documents of title enabling the holder to take pos-
session of a specified parcel of metal at a specified LME-approved
warehouse. Each LME warrant is for one lot of metal, the tonnage of
which is dependent on the contract specification. The front of the
LME warrant displays information about the parcel of metal, includ-
ing its brand, the exact tonnage, the shape and the location.
Warrants are issued by the warehouse companies at the request of
the owner of the metal once it is properly stored in an LME-approved
warehouse and the warehouse company has ensured conformity with
the LME’s Special Contract Rules for that metal. These rules include,
but are not limited to, the technical specification of the metal, its
shape, weight and bundling. The metal must also be of a brand that
is approved and listed by the LME.
The LME is very proud of its global role in providing a pricing mech-
anism that reflects the state of the markets it serves. For the LME, an
essential factor in achieving this aim is to maintain a spread of
approved warehouse locations that reflects the needs of the users of
the market and to monitor those approved locations for continued
compliance with the listing criteria. Such criteria include the need for
locations to be in areas of net consumption or to be ‘gateways’ serving
those areas of net consumption and also to meet the LME’s strict
legal, taxation and customs requirements. There are over 400 ware-
houses in some 32 locations covering the United States, Europe, the
Middle and the Far East.
The LME is also active in assessing potential new locations as good
delivery points. The location criteria are designed to ensure that
metal is stored in locations close to where it is needed, rather than
72 Clearing and settlement of derivatives