In Autumn 2016, I took on the role of being the first independent Chair of LBMA. Since then, many things have changed. This article summarises some of the most important developments as well as highlighting some of the future challenges.
Historically, the Chair of LBMA had been appointed from one of the bullion banks, but a combination of factors meant that this had become both infeasible and undesirable. It had often been alleged by critics with little or no internal knowledge of LBMA that it must be run by the big banks, for the big banks. When the financial scandals started to break after the Great Financial Crisis of 2007-2009, bank compliance departments did not want their employees exposed to such allegations, even though untrue.
So, should a Member representing a Refiner be Chairman? My immediate predecessor did a fantastic job, but having a refiner as chair raises a different set of issues. LBMA can receive commercially sensitive information from Refiners that cannot be shared with competitors and the LBMA Executive was responsible for making decisions about the Good Delivery List (GDL) that would place any Refiner on the Board in a conflicted position. But how could the Chair be kept out of some of the most important discussions and decisions LBMA has to make?
The Rise of Independent Leadership
To address this, LBMA started engaging independent Non-Executive Directors (iNEDs) – previously unheard of for a Trade Association. We now have a steady-state
requirement of three, including the chair.
Alongside the addition of iNEDs, we have introduced a raft of governance improvements. These include published minutes of the Board meetings, so that anyone can see at least the topics discussed and any decisions made; conventional Board effectiveness reviews – LBMA has just undergone its third; and perhaps mostly importantly, the creation of a decision-making committee formed of the iNEDs and those Board members who are LBMA executives (for most of my tenure that was two, in the form of the CEO and the Deputy CEO/General Counsel). This group now formally makes final decisions on suspension of GDL or Membership status so that the elected members are not put in a position where they are conflicted.
The Value of Central Bank Experience
It is perhaps natural that former central bankers are high up on the list when it comes to appointing iNEDs – not only are central banks still a key part of the bullion market, but one can expect central bankers to bring a knowledge of regulation, both voluntary and mandatory, combined with an understanding and experience of financial markets without being partisan to a particular firm.
Of course, one must never forget that LBMA is still a Trade Association, run for the benefit of the Members and for the wider market. LBMA GDL Refiners cover the bulk of world production, and LBMA standards have become recognised everywhere, even by those not involved in the London market. That global prominence has only increased over the past nine years.
Driving Standards and Innovation
LBMA has always understood that a common set of minimum, but high, standards for bullion sourcing and trading globally – and I mean truly global – is in the best interest of all those operating in the market, and of wider stakeholders from ‘rock to ring’.
During my time as Chair, I have seen LBMA introduce an array of improvements to the marketplace. I should stress that this represents the work of both LBMA staff and participants from all sectors of the market. The innovations have included: the Precious Metals Code, the publication of London vault holdings data and trade reporting data, and transparent auction processes by IBA for the benchmark rates. The Gold Bar Integrity (GBI) Database was launched in 2025 and should mark a new era in the ability to oversee the origin and traceability of bullion bars.
In addition to all of that, work on Responsible Sourcing for bullion continues to expand. In the Autumn of 2016, LBMA was operating Version 7 of the Responsible
Sourcing Guidance for gold, and there was no silver guidance. Currently we have Version 9 for gold and Version 2 for silver in place. Each new version addresses greater challenges as LBMA seeks continuous improvements to raise standards.
Collaboration and the Road Ahead
It is quite unusual for a Trade Association to be leading the development of so many significant projects, but it should be noted that LBMA is increasingly working with other partner bodies, such as the World Gold Council which has contributed significantly to the GBI Database project and is playing a leading role in the work following on from the Gold Industry Declaration of Responsibility and Sustainability Principles.
It has been quite a time for the gold market, with record prices to match. So, what is next to be done? The LBMA agenda will never be complete. Currently, it includes work to improve the accessibility to responsible artisanal production for GDL Refiners; establishing gold’s role as a high-quality liquid asset; and further measures to protect the integrity of gold and silver bullion bars. Forecasting the future is usually a risky business, but I can be pretty certain that my successor as LBMA Chair will be even busier than I have been.
