On November 11, the London Metal Exchange (LME) suspended the validity of 274 steel billet warrants belonging to financial services provider MF Global Holding Ltd, according to an announcemet released by the exchange. As defined by the LME, the lot size of 65 mt associated with each steel billet warrant means that the 274 warrants cover 17,810 mt.
LME deputy chief executive, Diarmuid O'Hegarty stated, " The 274 LME Steel Billet warrants have been temporarily suspended as good delivery against the LME Steel Billet Contract until further notice and will not constitute live warrants for the purposes of calculating dominant positions under the Lending Guidance."
The exchange also noted that the suspension of warrants is a situation which has arisen as MF Global has entered special administration. The administrator has taken control of the warrants and is unable to adhere to the lending guidance.
According to the statement, the special committee of the LME has reason to believe that the holder of the warrants is not prepared to comply with the lending guidance. As a consequence, the warrants will not constitute live warrants for the purposes of calculating dominant positions under the lending guidance.