(for the Global OTC Precious Metals Market)
Trade Reporting Average Daily Turnover
(data for the period 12-16 November, 2018)
On 20 November LBMA published trade reporting data to reveal the size of the LBMA membership’s share of the Loco London and Loco Zurich OTC market with daily average turnover for gold of $36.9bn and $5.2bn for silver. This equates to 30.2 million ounces for gold and 359.3 million ounces for silver. In future Simplitium will be publishing this gold and silver dataset on a weekly basis, each Tuesday at 9am.
The data represents the average taken over a five-day reporting week. It demonstrates the overall value of the OTC market, as represented by the LBMA Full members, and then a breakdown of the volume in spot, forward, swaps and loans/leases and deposit. The intention in Q1 2019 is to then move to daily reporting on a T+1 basis.
The publication of the Trade Reporting data through LBMA-i meets LBMA’s requirement to improve transparency and demonstrates liquidity in the global OTC precious metals market.
Not only does it tell us the true size of the market for the first time but the data will help form LBMA’s dialogue with regulators on matters such as Basel III’s Net Stable Funding Ratio.
Managed by Simplitium, the service collates anonymous and aggregated Trade Reporting data from LBMA members in the Loco London and Loco Zurich markets.
Click on the link below to access the gold and silver datasets for spot, swap/forward, options and loan /lease deposits in tenors from 1 week to 12 months plus.Download the latest Market Data
Public Dissemination - Going forward
LBMA intends to further enhance transparency by publishing data more frequently, providing additional data sets, and expanding the scope of publication to include platinum and palladium. Gold and Silver trade data is just the beginning and builds on what LBMA started several years ago. In 2014/15, LBMA worked with the market and Benchmark Administrators to provide more transparency to the benchmark process. Then later in 2016/17, LBMA worked with the London gold and silver vaults, to publish the vault holdings for the first time.
Full Press Release
Read a copy of LBMA Press Release
issued on 20 November.
What the Numbers Mean – Supporting Commentary
To add colour to the numbers and put them into context in order to understand their significance, view the supporting commentary prepared by Matthew Turner, Associate Director, Commodities & Economics Strategy Director, Macquire Capital Europe Limited.
- LBMA’s Commitment to Transparency
“The LBMA would also welcome further transparency through post trade reporting, providing the industry with data that at the moment does not exist for the bullion market.” January 2015, response to the Fair Effective Markets Review, led by the Bank of England, Financial Conduct Authority and HM Treasury.
LBMA’s commitment to transparency has seen a number of significant milestones since the launch of the FEMR report in 2015. LBMA completed a strategic review in the summer of 2015, with recommendations including the need for more transparency. This then followed a Request for Information and then a Request for Proposal to help identify a suitable service provider to support the strategic recommendation. Simplitium (formally Boat Services), was selected as the service provider, due to their expertise with MiFID I and II reporting, and a 100% track record for no security breaches. Simplitium, together with LBMA, launched a design study in Q4 of 2016, in order to understand and determine the scope of trade reporting. LBMA received a lot of valuable feedback and positive support, from members. The market recognised that the question no longer was if trade reporting was necessary, but rather what should be reported. Consequently, the market decided that once the trade reporting was implemented, it was important to publish aggregated data, to show the size of the LBMA OTC market, and how it compares with other markets and asset classes.
- Background - Fair and Effective Markets Review
The development of LBMA-i has its roots in the Fair and Effective Markets Review (FEMR), which was a comprehensive and forward-looking assessment of the way fixed income, currency and commodity (FICC) markets operate. It was led by the Bank of England, and co-chaired by the FCA and HM Treasury. The three organisations published the final report of the review, including findings and recommendations, on 10 June 2015.
- Scope of Trade Reporting Exercise
For the LBMA, it was important that the scope and trade reporting decisions were made in consultation with reporting members. Following extensive engagement with various LBMA members, it was decided:
- All LBMA Market Makers and Full trading Members would report their trade data onto a platform called LBMA-i, which will be operated by Simplitium.
- All spot, swaps, forwards, options, loans/leases/deposits would be reported and the reportable data would be owned by LBMA.
- Trades would be reported at the end of every trading day.
- Seller would always report if the trade took place between two banks or between two LBMA members. However, LBMA member would report both buy or sell, if the trade was between a LBMA member and a non-LBMA member.
- Client specific data would not be included other than just the trade specific information. 28 fields were agreed as being reportable under every instrument, unlike MiFID II, which requires more than 60 fields.
LBMA has placed strong emphasis on governance, and the need to ensure that members trade data is secure, confidentiality is appropriately protected and a clear and transparent framework for non-compliance is established. LBMA has developed a governance framework, which clarifies the roles and responsibilities, who has access to data, how conflicts of interests are managed, how large and/or sensitive trades are addressed and the enforcement process. This document is available on the LBMA-i website, which has been developed in consultation with LBMA members, and supported by an external law firm.
In addition, Simplitium, as the operator of trade reporting platform, has been working closely with reporting members to ensure that data security is managed. In 10 years of operation, Simplitium has had no data security breaches since inception. They have formal InfoSec, privacy governance and compliance policies implemented group wide, reviewed and updated annually. They use industry standard practises derived from ISO 27001, SANS, and NIST Cybersecurity Framework, and also regularly schedule third Party security agencies to do penetration testing, auditing and reviews.
Data Licensing Arrangements
The intention is that the data will be free to view for a three month period from 20 November following which market data vendors and others requiring access to the data should contact Simplitium regarding connectivity and licencing at firstname.lastname@example.org.