Much of the work completed by LBMA within the FMSB’s compendium has been related to the status of gold within prudential regulatory rules.
LBMA and World Gold Council are working hard to demonstrate that gold should be considered a potential candidate for High Quality Liquid Asset (HQLA) status.
The LBMA trade data goes a long way to demonstrate gold’s suitability but further work is required. One area is scoping a forward gold benchmark to bolster the perception of robustness of the market and to provide ease and certainty of valuation. This work is advancing and we expect to provide further updates by the end of this year. Another missing element that was highlighted in the FMSB spotlight reviews and also the compendium is the lack of OTC precious metals pre trade data. LBMA planned to complete this dataset by conducting regular polls of the membership - this would be in line with other OTC market practices - however, working with Refinitiv we have identified a source of what, at some time, were tradeable bids and offers that derive from trading venues. The use of this data now allows us to calculate spreads on a minute-by-minute basis; thus completing another
requirement for HQLA criteria.
The third initiative that LBMA will undertake is to enhance the value of market making by requesting that all Market Makers (MM) attest to a minimum market making requirement on an annual basis. In simple terms this involves attesting that MM make markets to their clients as well as other MM. LBMA is also planning to consult with all members to find out if there is a willingness to create another annually attested list of ‘liquidity providers’.