Metals Trading Has a Paper Fraud Problem
- Natixis, ANZ suits over nonexistent nickel shows industry flaw
- No standard for verifying stockpiles stored around the world
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For all the high-tech wizardry of modern financial markets, there’s one corner of the commodity world that still depends almost entirely on printed paper -- making it an easy target for crooks.
Buyers and sellers of base metals like copper, aluminum and nickel use documents known as warehouse receipts to prove every pound involved in a transaction actually exists and who owns it. The receipts, from a long list of issuers who often stamp them with holograms and secret codes, have become the linchpin of bank loans backed by the metal as collateral.