Governance and Regulation

Trading in spot, forwards and wholesale deposits in the bullion market is underpinned by the Global Precious Metals Code.

Global Precious Metals Code

The Global Precious Metals Code, launched on 25 May 2017 (with minor amendments made in April 2018), sets out the standards and best practice expected from market participants in the global Over the Counter (OTC) wholesale precious metals market.

Adherence to the Code

The Code is intended to define a robust, fair, effective and transparent market where all participants are able to transact following best practice guidelines. It sets out a common set of principles to promote the integrity and effective functioning of the global market covering ethics, governance, compliance and risk management, information sharing and business conduct.

All market participants involved in the global wholesale precious metals market are expected to act according to the principles of the Code. LBMA members will be required to attest their conformance with the Code by signing a Statement of Commitment by 1 June 2018.

Member Training

To assist members and market participants in adherence to the Code the LBMA has developed a training module in partnership with ACI Financial Markets Association (ACI). This will provide LBMA member institutions and individual practitioners access to an E Learning, Attestation and Certification (ELAC) Portal. By offering access to the ELAC portal, LBMA will ensure its members participate in a standardised, high-quality training and education programme.

The ELAC portal combines illustrative examples and scenarios for precious metal market practitioners across different roles and circumstances building on the ACI ELAC portal developed to assist market participants including Central Banks, Regulators and Operations Personnel with adherence to the FX Global Code of Conduct (FXGC).

Access to the ELAC portal is subject to a subscription fee. If you are already a subscriber to the portal you can log onto your account here. If you have not already subscribed you can request a demonstration of the portal by clicking here. For further information please contact Hayley Brooks,, or

LBMA is hosting a training webinar on 26 April, 2018 at 14:30 - 15:30, to provide members with a demonstration of the portal. To register for the webinar please email

Bank of England

On 6 February 2018, the Bank of England issued a Statement of Commitment to the Code. By doing so the Bank is demonstrating that it is committed to adhering to the principles of the Code when acting as a market participant within the market, and that its internal practices and processes are aligned with the principles of the Code.

Further Background

The Code has its roots in the Fair & Effective Markets Review published in June 2014. Led by the Bank of England, and co-chaired by the FCA and HM Treasury, FEMR was a comprehensive assessment of the Fixed Income, Currency and Commodities markets.

The objective was to restore trust in the markets and influence cross-border discussion on trading practices. In total, FEMR has led to the development of three separate Codes for the Fixed Income, Currency and Commodities markets.

The Global Precious Metals Code published by the LBMA replaced the bullion annex of the Non-Investment products (NIPs) Code.

The Code is closely aligned with the FX Global Code, which was published on 25 May 2017 by the Bank for International Settlements.

A new voluntary UK Money Markets Code setting out the standards and best practice expected from participants in the deposit, repo and securities lending markets was published by the Bank of England on 26 April 2017.

LBMA Board Terms of Reference

The role of the LBMA’s Board is to consider matters and make decisions as provided for under the Terms of Reference set out below. The Board is responsible for setting the strategic and business vision for the LBMA, as well as scrutinising performance, ensuring strong corporate governance and challenging the LBMA on the delivery of its key targets and objectives. It sets the standards, both in words and deeds, for how the LBMA conducts its work and the culture it promotes.

However, given the business demands, it is also necessary for the Board to delegate, appropriately, some decision making powers to the Chief Executive & Executive Leadership team (the Executive Committee “EXCOM”). Such delegated powers include running of benchmark subsidiary PMPL, Sub-Committee work, operational matters, marketing strategy, and personnel matters. The overall aim will be to enhance both the governance and delivery of the LBMA in full support of its Membership’s needs.

1. Strategy and Management

(a) Approve the LBMA’s long-term and short-term objectives and strategy.

(b) Ensure that the quality and integrity of the precious metals market is maintained.

(c) Identify and address potential threats to the precious metals market.

(d) Approve annual budgets and any material changes to them.

(e) Approve any material extension or cessation of the LBMA’s activities.

(f) Approve any major changes to the LBMA’s management, control structure or status.

2. Financial Reporting and Controls

(a) Approve the annual report and accounts, including corporate governance statements.

(b) Ensuring maintenance of good internal control and risk management.

(c) Approve any major expenditure that could materially impact on the LBMA reserves.

(d) Approve any major acquisitions or disposals of fixed assets or operations.

3. Executive and Non-Executive Appointments

(a) Approve changes to the structure, size and composition of the Board, within the powers granted in the Memorandum & Articles of Association.

(b) Select the Chairman, the Chief Executive, NEDs and other Board level appointments.

(c) Determine membership and Chairmanship of the Board Sub-Committees with delegated powers.

4. Remuneration

(a) Determine the remuneration of the NEDs, Chief Executive and key reports pay awards.

(b) Ensure provision of support or guidance for compliance with local employment laws.

5. Corporate Governance

(a) Approve terms of reference of Board Sub-Committees with delegated powers.

(b) Receive reports from board Sub-Committees on their activities and where appropriate acting on recommendations.

(c) Review of the group’s overall corporate governance arrangements.

(d) Receive reports on the views of the LBMA’s Members and key stakeholders.

Regulation and Supervision

The LBMA has no regulatory responsibilities for the bullion market, this had traditionally been the responsibility of the Bank of England and more recently the Financial Services Authority. However, the Global Precious Metals Code helps to fill this space by defining standards of conduct for all market participants in the precious metals market to adhere to.

The financial crisis triggered major regulatory changes which came into effect on 1 April 2013. The Financial Services Act (2012) established an independent Financial Policy Committee (FPC), the Prudential Regulation Authority (PRA) as a subsidiary of the Bank, as well as new responsibilities for the supervision of financial market infrastructure providers.

The PRA is responsible for the supervision of banks (including bullion banks), building societies, credit unions, insurers and major investment firms.

The Financial Conduct Authority (FCA), which was established out of the Financial Services Authority and is separate from the Bank. The FCA supervises the conduct of 50,000 firms and regulates the prudential standards of firms not covered by the PRA, such as asset managers and independent financial advisers. The LBMA maintains a close working relationship with both the PRA and the FCA.

HMR&C considers Full Members of the Association as official members of the market and can therefore trade under the terms of the Terminal Markets Order (TMO).

The TMO, the oldest part of the UK's VAT legislation, was intended to be VAT neutral. It was put in place to minimise the VAT administration burden as far as the UK commodity markets were concerned, to maintain its competitiveness particularly in relation to non-EU markets.

A Memorandum of Understanding (MOU) has been signed between HM Revenue and Customs and the LBMA and the London Platinum and Palladium Market (LPPM) Association. It is intended to assist Members of both associations:

  • understand the transactions that take place on the London Bullion markets
  • determine the supplies that take place for VAT purposes
  • determine the liability to VAT of those supplies in respect of the different precious metals and markets
  • confirm those transactions that need to be reported on quarterly statistical reports of cross-border services.

The purpose of the MOU is to provide background information on trades typically affected by LBMA and LPPM Members, their current treatment for VAT purposes, and where greater clarity and certainty can be introduced.

Responsible Sourcing

LBMA maintains the highest standard for responsible sourcing for precious metals. The scope of the guidance not only meet but exceed conflict minerals regulations. Further information relating to the LBMA's work in relation to Responsible Sourcing can be found here.