| Warehouse receipts are a crucial element
| |
| | The main advantages of warehouse receipt
|
| for risk mitigation, enabling a financier
| |
| | financing from a risk management
|
| to lend to a borrower, who wants to
| |
| | perspective are:
|
| finance the shipment of commodities for
| |
| | The identity of the collateral is less
|
| sale or purchase. Using warehouse receipt
| |
| | contestable and the intention of the
|
| finance, a bank, or trader, relies on
| |
| | borrower to pledge it is clear, avoiding
|
| goods in an independently controlled
| |
| | ownership disputes and competing claims.
|
| warehouse to secure financing. Usually
| |
| | The collateral can be auctioned or sold
|
| providing (among many things) there is an
| |
| | promptly and at low cost if there is a
|
| off-taker and that there are other forms
| |
| | loan default
|
| of recourse (the borrower?s balance sheet
| |
| | A lender holding a warehouse receipt can
|
| for example) banks will lend against
| |
| | claim against the issuer (the warehouse
|
| commodities stored in a reliable
| |
| | company) as well as the borrower in the
|
| warehouse and which have been properly
| |
| | event that the collateral goes missing
|
| pledged to them in a sound legislative
| |
| | In a bankruptcy scenario a document of
|
| environment. So warehouse receipts
| |
| | title can cut off the claims of competing
|
| provide for a degree of physical risk
| |
| | creditors.
|
| mitigation and, in support of an
| |
| | Warehouse receipts can be negotiable or
|
| exchange-based trading system, they are
| |
| | non-negotiable. A non-negotiable
|
| important for underpinning futures.
| |
| | warehouse receipt is made out to a
|
| Accordingly, warehouse operators can act
| |
| | specific party (a person or an
|
| as key influencers of risk management. If
| |
| | institution). Only this party may
|
| they are able to issue warehouse
| |
| | authorize release of goods from the
|
| receipts, which can be used as collateral
| |
| | warehouse. He may also transfer or assign
|
| by banks, they may use this as a way of
| |
| | the goods to another party, for example a
|
| encouraging deliverers of commodities to
| |
| | bank. The warehouse company must be so
|
| move stocks into their facilities.
| |
| | notified by the transferor before the
|
| Warehouse operators receive goods into
| |
| | transfer or assignment becomes effective.
|
| the warehouse and issue ?receipts?
| |
| | The non-negotiable warehouse receipt in
|
| showing the goods have been received into
| |
| | itself does not convey title and, if it
|
| the store. Among other things, the
| |
| | is in the name of, for example, a trading
|
| receipts themselves contain information
| |
| | firm, it needs to be issued in the name
|
| about the quality and type of the
| |
| | of or transferred to the bank in order
|
| commodity taken into store. The receipts
| |
| | for the bank to obtain more than just a
|
| are for the information of the depositor
| |
| | security interest. A security interest is
|
| of the goods or, if he is a borrower, for
| |
| | much less attractive to a bank than if it
|
| his bank. However, these receipts are not
| |
| | has what is called possessory collateral,
|
| negotiable documents of title, i.e. the
| |
| | i.e. it has direct recourse to the
|
| title to the goods themselves may not
| |
| | warehouse where the goods are stored and
|
| transfer from one to another person via
| |
| | in the event of a default or similar, it
|
| the passing of the related warehouse
| |
| | is easy for the bank to sell the
|
| receipt.
| |
| | commodities in a shorter time frame.
|
| Herein lies the potential for some degree
| |
| | Issuers of non-negotiable warehouse
|
| of confusion. The term ?warehouse
| |
| | receipts include collateral managers.
|
| receipt? means different things to
| |
| | They are becoming increasingly important,
|
| different groups of people around the
| |
| | with companies like ACE, Cotecna, Control
|
| planet. For example, in the United
| |
| | Union, Drum and SGS rolling out
|
| States, the term ?warehouse receipt? is
| |
| | collateral management products to serve a
|
| used for a document evidencing storage of
| |
| | growing international market.
|
| a commodity in a warehouse. Unlike
| |
| | Notwithstanding the fact that most
|
| elsewhere, it is a document of title,
| |
| | bankers, borrowers and warehousemen say
|
| supported by legislation; in this case
| |
| | they find collateral management ?just too
|
| the US Warehouse Receipts Act of 2000,
| |
| | expensive? their desire to use the
|
| which replaced a piece of legislation
| |
| | services of collateral management
|
| enacted in the US in 1916. By contrast,
| |
| | companies is increasing. In the absence
|
| in the United Kingdom a warehouse receipt
| |
| | of totally secure physical commodity
|
| is a non-negotiable instrument simply
| |
| | storage facilities and resulting from the
|
| notifying that at a certain moment in
| |
| | risks in moving commodities about, banks
|
| time a certain amount and quality of a
| |
| | are obliged to find other structures for
|
| commodity was delivered into a warehouse.
| |
| | protection against physical risks. The
|
| In the UK, a negotiable form is
| |
| | collateral management agreement, or CMA,
|
| represented by a warehouse ?warrant? of
| |
| | offered by a number of global firms,
|
| the type issued by London Metal
| |
| | offers one such solution.
|
| Exchange-nominated warehouses.
| |
| |
|
