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In response to recent discussions in the press and the market following publication by the London Metal Exchange (LME) that ETF Securities has opened a metal account at the LME, ETF Securities wishes to confirm that it is preparing to launch a range of physically-backed industrial metal exchange traded commodities (ETCs), subject to approval from relevant regulators and the London Stock Exchange. The industrial metal range of ETCs will include physical aluminium, copper, lead, nickel, tin and zinc, as well as a basket consisting of all six metals.
It is proposed that applications and redemptions by market makers will be made against delivery of LME Warrants1. The LME allows for cash trading and offers hedging, worldwide reference pricing and physical settlement. The industrial metal backing each product will be stored in LME-approved warehouses. Deutsche Bank A.G., London Branch will provide trading, administrative and custody services relating to the industrial metal and the product generally.
Commenting on the proposed new physical industrial metal ETCs, Graham Tuckwell, Chairman and CEO of ETF Securities said:
"We continue to see strong demand for industrial metals and investors have often asked us to provide a product that is priced off and backed by physical metal. This new platform is intended to provide investors with exposure to physical industrial metal without the need to purchase and store such metal directly. We believe that our proposed product structure and the use of LME Warrants will provide secure and transparent access to the physical metals market. These products will complement our existing offerings which are priced off futures prices rather than cash market prices."
Further information on the products will be published in due course, subject to approval from relevant regulators and the London Stock Exchange.
1LME Warrants evidence title to specified lot of industrial metal and are used to settle short positions on the London Metals Exchange, which is the world's largest futures exchange for industrial metals. The LME plays an important role in price discovery, and its official prices are used by a wide variety of market participants.
