The London Metal Exchange said April 28 that it has launcheda new electronic warehouse receipt system called LMEshield.
LMEshield is a custody tool that issues and manageselectronic receipts relating to commodities stored off-warrant in a range of globallocations.
According to Matthew Chamberlain, the LME's head of businessdevelopment, the receipt system will help the LME extend its experience insecure warranting beyond the exchange's network to improve confidence in globalwarehousing, prevent fraud and expand the market for commodities financing,citing the need for a reliable standard for global warehousing.
A Reuters report released the same day said the LMEshieldwill guard against the type of fraud that happened at China's Qingdao port in2014.
In June 2014, a discrepancy in the amount of metals receivedat the port triggered an investigation into the incident, which of aluminum andcopper and caused anxiety among bankers and trade houses. Afterwards, certainfirms have started legalaction to secure their metal stockpiles stored by warehouseoperators at the port.
LMEshield is available in 19 jurisdictions, includingcountries new to the LME storage network such as India, South Africa and Chile,and the exchange plans to further expand the receipt system's network in termsof jurisdictions and covered commodities.