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2019 Annual Review

Wednesday, July 10, 2019

LIQUIDITY OF THE GOLD MARKET

The LBMA is delighted to launch its latest Annual Review covering all of our work as the standard setting organisation for the global precious metals market. The main highlights are summarised below and a full copy of the Review can be downloaded here.

$42 BILLION OF GOLD TRADED EACH DAY

Our key achievement over the last twelve months is that for the first time in over 300 years of trading, we published for the first time weekly trade reporting data for gold and silver in November 2018, covering spot trading, forwards, swaps, options and loan lease deposits. Since then we have added similar data sets for platinum and palladium as well as daily data sets for all four metals.

Not only do we now have reliable, consistent data on the global OTC market for the first time but we can also analyse how liquid it is. This liquidity analysis makes the market more attractive to new and existing market participants but most importantly strengthens LBMA’s dialogue with regulators and policy-makers on matters such as the EU’s implementation of Basel III.

UNLOCKING PRECIOUS LIQUIDITY

When analysing the liquidity of the precious metals market, we applied the same metrics as used by the European Banking Authority (EBA) in its 2013 report on definitions of High Quality Liquid Assets (HQLAs). We compared precious metals against government, covered and corporate bonds, which were all considered HQLAs. Gold stands away from the pack. Our preliminary analysis set out in the table on page 7 of our Annual Review, indicates that gold is much more liquid than government bonds, which are considered not only a HQLA, but an Extremely HQLA.

EXPANSION OF RESPONSIBLE SOURCING GUIDANCE

Other achievements over the last 12 months include our continued work on ensuring integrity for the market, most notably the expansion of Responsible Sourcing Guidance to include Environmental, Social and Governance (ESG) issues. We also continue to encourage the adoption of the Global Precious Metals Code by market participants, including central banks. Both of these initiatives demonstrate the importance of using LBMA values to support the global market.

GLOBAL OUTREACH

LBMA has also increased its global engagement. In 2018, we increased our representation in Asia and launched a Chinese version of the website, to help facilitate global growth and cooperation in this key market. Cooperation will reach a crescendo in October 2019 when our annual conference, held in association with the Shanghai Gold Exchange (SGE), arrives in Shenzhen, China.

DELIVERING VALUE

All of LBMA’s initiatives are designed to optimise the support for LBMA members, ensuring that we remain a cost effective membership organisation delivering value for money to members and supporting the market as a whole. Broader industry engagement is crucial to LBMA’s success in fulfilling its mission: to ensure integrity, transparency and leadership for the global precious metals industry.

For further information, please contact Aelred Connelly, PR Officer at Aelred.Connelly@lbma.org.uk.

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