UPDATE 1-LME Lifts Suspension of 274 Steel Billet Warrants

Industry News 03:34:55PM Jan 29, 2012 Source:SMM

LONDON Jan 26 (Reuters) - The London Metal Exchange reinstated 274 steel billet warrants previously held by bankrupt brokerage MF Global, the exchange said on Thursday.

The warrants suspension last November has accelerated the decline of the LME steel billet contract, a steel derivative that has so far failed to meet expectations, steel traders said this month.

The exchange had suspended the validity of the 274 warrants, which were held by MF Global on behalf of steel trading house Stemcor, after the broker's administrator had taken control of the them.

The LME had stated in November that since it had reason to believe the holder of the warrants was not prepared to comply with its rules on lending guidance the warrants would not constitute live warrants for the purposes of calculating dominant positions under the lending guidance.

LME warrants are receipts for physical material held in warehouses approved by the exchange.

Every warrant represents 65 tonnes of metal therefore the 274 warrants represent almost 18,000 tonnes of steel billet.

Under LME guidelines to prevent market abuse, a party holding a dominant position in warrants, or over 50 percent of the total, must be prepared to lend metal to other parties if the LME requires it.

MF Global filed for bankruptcy in the United States last October after piling up risky bets on debt from troubled euro zone nations.
 

Key Words:  LME  steel 

UPDATE 1-LME Lifts Suspension of 274 Steel Billet Warrants

Industry News 03:34:55PM Jan 29, 2012 Source:SMM

LONDON Jan 26 (Reuters) - The London Metal Exchange reinstated 274 steel billet warrants previously held by bankrupt brokerage MF Global, the exchange said on Thursday.

The warrants suspension last November has accelerated the decline of the LME steel billet contract, a steel derivative that has so far failed to meet expectations, steel traders said this month.

The exchange had suspended the validity of the 274 warrants, which were held by MF Global on behalf of steel trading house Stemcor, after the broker's administrator had taken control of the them.

The LME had stated in November that since it had reason to believe the holder of the warrants was not prepared to comply with its rules on lending guidance the warrants would not constitute live warrants for the purposes of calculating dominant positions under the lending guidance.

LME warrants are receipts for physical material held in warehouses approved by the exchange.

Every warrant represents 65 tonnes of metal therefore the 274 warrants represent almost 18,000 tonnes of steel billet.

Under LME guidelines to prevent market abuse, a party holding a dominant position in warrants, or over 50 percent of the total, must be prepared to lend metal to other parties if the LME requires it.

MF Global filed for bankruptcy in the United States last October after piling up risky bets on debt from troubled euro zone nations.
 

Key Words:  LME  steel