Membership
Rules for Members
Our rules provide a consistent and transparent set of requirements that all our Members must meet.
As the independent authority for precious metals, we set standards and uphold trust in the global market. Our rules are an essential part of this function. Following the recent approval of changes to LBMA’s Articles of Association, the LBMA Membership Rulebook is subject to amendment and will be published once approved.
Operational Requirements for all Applications
Members must have an effective governance framework that ensures accountability and oversight of their business. Members must also have a compliance and risk framework that provides for a robust control and compliance environment, which identifies and manages risks associated with their engagement in the market.
Other business requirements are:
| Requirements | Market Making Member | Full Member | Affiliate Member |
|---|---|---|---|
| Is a corporate entity incorporated in the UK or overseas | ● | ● | ● |
| Is active in areas that are closely related to the London Bullion Market (1) | ● | ● | |
| Has activities that are relevant to the global precious metals markets (2) | ● | ||
| Is able and committed to comply with the Global Precious Metals Code (3) | ● | ● | ● |
| Is able and committed to comply with Trade Reporting obligations and LBMA Trade Data Guidelines (3) | ● | ● | ● |
| Enjoys a financial and business standing suitable for the type of Membership that it is applying for (4) | ● | ● | ● |
| Is able to respond quickly to requests for prices from other Market Makers and onboarded clients, providing two-way price quotations in line with current market conditions (5) | ● | ||
| Offers price quotation services during normal London Bullion Market trading hours (6) | ● | ||
| Is able to quote any combination of spot, options and forwards for both gold and silver throughout the London business day in the maximum quantities (7) | ● | ||
| Is able to provide liquidity and prices to their onboarded clients during London Bullion Market hours at a minimum (8) | ● |
(1) These activities include trading, broking, shipping and storage, mining, refining, inspection and assaying, and research. For companies trading bullion and derivatives, this means trading bullion or related derivatives, such as forwards and options, in the loco London market with at least three existing Members.
(2) Activities such as trading, refining (must have LBMA Good Delivery List status before an application will be considered), melting and assaying, fabricating, broking, mining, vaulting, inspections, auditing, consultancy or whose business activities are relevant to LBMA.
(3) For banking, trading and broker entities only (including GDL Refiners with trading arms).
(4) In assessing this criteria, the Membership Committee and ExCom will have regard to the suitability of its employees or representatives.
(5) Market Making applies to spot, forward and options trading, and applicants can apply by specific product or a combination thereof. Applicants who are admitted for all three products will be deemed to be Full Market Making Members.
(6) These are 08:00 to 17:00 GMT or, on days when the New York market is closed, until the London PM Gold Price auction.
(7) Quantities are subject to review and amended from time to time by the LBMA Board. Please refer to the Membership Rulebook for the current Market Making quantities.
(8) These requirements do not create any legal obligations for Market maker to their clients, as these are a matter for bilateral contracts.
Rules Summary
Principle 1 –Integrity: A Member must act with integrity, including by adopting best practice and responsible business practices, and must be open and cooperative in its dealings with LBMA.
Principle 2 – Skill, care and diligence: A Member must conduct its business with due skill, care and diligence.
Principle 3 – Management and control: A Member must take reasonable care to organise and control its affairs responsibly and effectively, employing adequate risk management systems.
Principle 4 – Financial prudence: A Member must maintain adequate financial resources and records.
Principle 5 – Market conduct: A Member must observe proper standards of market conduct.
All new applicants must complete an online application form, which is accessible via the My LBMA portal. As part of the online application, the Applicant must provide the following documentation before the Due Diligence process can commence:
- Due Diligence documents to support the selected Member category, as highlighted in the application form.
- Details of three Members as attesters to support the application. Each attester must be a current Member with whom the Applicant has had a bullion-based relationship for at least one year. Each attester must provide a letter of recommendation, confirming the nature and duration of their bullion-based relationship with the Applicant.
- A Statement of Commitment confirming adherence to the Global Precious Metals Code.
- The appropriate non-refundable application fee.
The Executive will review the application, carry out Due Diligence and prepare a report for the Membership Committee to review. The Membership Committee may ask additional questions and reserves the right to interview the Applicant. Once satisfied, the Membership Committee will provide a recommendation for the ExCom’s consideration.
LBMA aims to process applications in accordance with the process set out in Schedule 4 within approximately three to four months. The timeframe can change, depending on the outcomes of the Due Diligence process and any questions arising from the ExCom and Membership Committee.
The ExCom will have the ultimate decision whether to accept or reject an application, and this decision must be ratified by the Board. A letter will then be sent to the Applicant informing them of the decision. However, LBMA is not obliged to provide any reason for its decision to approve or reject any application for Membership.
Members must have an effective governance framework that ensures accountability and oversight of their business. Members must also have a compliance and risk framework that provides for a robust control and compliance environment, and that identifies and manages the risks associated with their engagement in the market. Failure to meet the requirements of LBMA rules can potentially lead to the Membership being suspended or revoked. The determination of any sanction is based on the sole discretion of the ExCom. In addition, every Member must:
- Organise and control its internal affairs in a responsible and effective manner by employing appropriate and adequate risk management systems.
- Ensure that all of its dealers, staff and directors involved in the conduct of business in any regulated market or on a recognised exchange are fit and proper, suitable,
appropriately and adequately trained, properly supervised and, where appropriate, suitably qualified. - Have appropriate and adequate business continuity plans.
If Members are found to be in breach of the rules within the Membership Rulebook, several actions can occur:
- Written warning: a written warning will be issued, asking the Member to remediate the breach within a given time. Failure to remedy could lead to suspension or termination;
- Suspension: LBMA reserves the right to suspend Membership status with immediate effect until further notice should LBMA require time to investigate potential issues/breaches. If, on further analysis, LBMA determines that the Rules are not being adhered to, LBMA reserves the right to terminate or revoke Membership.
Membership may be terminated/revoked if a member commits an act that has the potential to bring the LBMA in to disrepute. Such acts include:
- Commits a serious breach of the Rules
- Repeatedly breaches the Rules (which can amount to a serious breach);
- Fails to remedy a breach within six months of first being sent a warning notification; or
- Commits a serious offence under the rules of any relevant regulatory body.
The Sub-Board Group may terminate or revoke Membership without the Member’s consent and the Member shall cease to be a Member from the date of the decision.
A Member may at any time resign from LBMA Membership by giving notice in writing to LBMA and shall thereupon cease to be a Member. If a Member resigns or Membership is terminated/revoked, the Membership Fee will be payable in full for the year in which the resignation or termination occurs. If the Member has already paid the Membership Fee, there is no entitlement to recover such payment or any part thereof from LBMA.