Market Regulation

An overview of the rulebook governing LBMA and the precious metals market.

Fair and Effective Markets Review
The Fair and Effective Markets Review (FEMR) was commissioned in 2014 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 (FICC) markets, and led to the establishment of the FICC Markets Standards Board (FMSB). The objective of FMSB was to restore trust in the markets and influence cross-border discussions 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.
Global Precious Metals Code
The Code applies to the financial trading and physical trading of Precious Metals internationally. The global Precious Metals market features a diverse set of participants that engage in the market in different ways and across various products, for example, the extraction, refining, transportation, storage, financing, transacting and marketing of Gold, Silver, Platinum and Palladium. The Code is written with this diversity in mind. While there can be no universal “one size fits all” approach given the diversity of the market, the Code is intended to establish a common set of practices for responsible participation in the market.
The Code was prepared by LBMA following an extensive period of consultation with Members as well as participants from the global Precious Metals market. It is endorsed by the LBMA Board, which comprises Market Participants from a representative cross-section of the LBMA Membership and Non-Executive Directors. The LBMA Board is chaired by an independent Non- Executive Director.
The LBMA Precious Metals Code Working Group (PMCWG), with expertise in the regulatory aspects of the Precious Metals market, assisted with the preparation of the Code and will continue to help to ensure that it remains fit for purpose. The Working Group will meet regularly and agree any updates ahead of the publication of an updated version of the Code each year.
FEMR Consultation: How fair and effective are the fixed income, foreign exchange and commodities markets? (October 2014)
LBMA Response to FEMR Consultation (January 2015)
Responsible Sourcing Programme
LBMA’s Responsible Gold and Silver Guidance documents form part of the Responsible Sourcing Programme, and consolidate and formalise already existing high standards of refiners’ due diligence. The Guidance documents are based on the OECD Due Diligence Guidance as well as Swiss and US KYC, Anti-Money Laundering and Combating Terrorist Financing regulations.
Under the Responsible Sourcing Programme, all refiners have to establish strong management systems; identify and assess risks in the supply chain; design and implement a management system to respond to identified risks; arrange for an independent third-party audit of the supply chain due diligence; and to publicly report on the supply chain due diligence.
LBMA’s work in this area has focused on addressing the money laundering, corruption and bribery issues across the jurisdictions where physical gold is sourced and transported. This has helped to regulate the underlying asset of the market. Where the refiner does not comply with this Programme, the refiner could be removed or suspended from the Good Delivery List. If a refiner was to be removed from the Good Delivery list, this would have serious commercial and reputational issues for the refiner and their ability to sell material in the international market.
See the Responsible Sourcing page for more information.
LBMA Board Governance
LBMA’s Board was restructured in 2016 to bring independence and strengthen decision making capability, including the appointment of two independent non-executive directors.
The Board meets on a quaterly basis to discuss matters of strategic importance as well governance year and extensive changes have been made to improve governance. The restructure promotes and evidences LBMA's core values of leadership, trust and integrity.
See the Board and Committees page for more information.
LBMA Internal Policies