Where do we actually stand? A quarter-end checklist for a base-metals book

Six reconciliation tests to work before the desk opens, each with a figure you write down.

You stand where physical, hedge and broker books agree, line by line, on the morning you are asked. Run the checks below before the desk opens: open tonnage by metal, quotation periods, hedge linkage, price source, and cover against policy. Anything without a trail stays open.

Quarter-end morning. Finance wants a number it can sign. Audit will want the trail behind it. Work this list with the book open, and write each figure down.

Does the physical match the broker, by metal?
The physical book and the broker confirmations must show the same open tonnage for each metal, with the same prompt dates. Pull both, match them line by line, and write down what is open, in which metal, and since when.

Anything left between the two is not timing. It is tonnage without a hedge or a hedge without tonnage. See the piece on why the books don't agree for how that gap opens.

Do the quotation periods line up?
Every purchase and sale must carry the quotation period it will price against, and the hedge must sit in the same window. Where a purchase prices in one period and the sale in another, basis moves in the gap.

Write down each mismatched period, the tonnage inside it, and the spread between the two pricings. Close the gap or carry it knowingly.

Is each hedge still tied to the physical it was placed against?
A hedge placed against tonnage that has since shipped, repriced or changed shape no longer covers what you think it covers. Walk each hedge back to its physical lot.

Write down the linked tonnage, the contract and the venue. Anything unlinked goes back to exposure. LME and MCX live on screen; COMEX and SHFE computed into the arbitrage view.

Can you show the working behind every figure?
A total without a trail will not hold in front of the board or audit. Each number must break back to its lines: lot, contract, price source and date.

Write down where the trail breaks, if it breaks. See the piece on showing your working for what a provable trail looks like.

Did adding a metal break the reconciliation?
A new metal brings its own prompts, its own spreads and its own confirmations. Most books absorb copper and then trip on the second or third metal.

Write down open tonnage and prompt coverage for each metal separately, not as one book. See the piece on adding a metal for where the second metal breaks the method.

Does cover match board policy, on the day?
Policy sets how much of approved production or floating input must be covered, and in what. Compare actual hedge coverage against that line, metal by metal.

Write down the coverage figure and the policy limit beside it. Anything outside policy is a decision, not an oversight. See the four-breaks piece for the four places quarter-end usually fails.

If a line will not square, talk to us before the close signs it.