Two years after Qingdao scandal, LME bets on electronic tracking of metal
* LMEshield gains some tractionn among banks, warehouses
* Some traders worry about privacy of stocks
* LME faces other hurdles of cost, jurisdiction
* Could open way to use LMEshield in China
By Melanie Burton
MELBOURNE, June 1 (Reuters) - The London Metal Exchange is expanding its new electronic method of tracking metal in warehouses, as the system launched in April gains early traction among some western and Chinese banks, as well as warehousing and metals firms looking to cut risks.
Global metals markets were rocked two years ago by a $3 billion fraud in the Chinese port of Qingdao. A firm allegedly duplicated warehouse certificates to pledge metal as collateral for multiple bank loans, hitting companies ranging from Citic to Standard Chartered.
LMEshield, which provides electronic receipts as proof of ownership for metal stored outside the LME's own network of registered warehouses, is adding five jurisdictions where it will operate - Brazil, Chile, India, Japan, South Africa - to a 14-country list and is also extending to coal, iron ore and ferroalloys.
"We are delighted with the support we have seen for this initiative so far, and we plan to add more than 20 facilities to the network in a range of jurisdictions in the next few days," the LME's head of business development Matt Chamberlain said. Continuación...