Net Stable Funding Ratio (NSFR)

In November 2021, the European Banking Authority published its report on Required Stable Funding (RSF) for precious metals clearing and financing.

The report concluded that, according to its studies, NSFR had limited impact on precious metals markets. It said that “reducing the RSF from 85% to 0% would have a negligible impact”.

In June, the Bank of England and the Prudential Regulatory Authority (PRA) replied to responses to their consultation CP5/21. In the subsequent policy statement, the PRA amended its approach to precious metals deposit taking and clearing by introducing an interdependent precious metals permission, for which firms may apply in respect of their own unencumbered physical precious metals stock and customer precious metals deposit accounts.

When the permission is granted, firms would apply a 0% RSF factor to their unencumbered physical stock of precious metals, to the extent that it balances against customer deposits.

Liquidity Coverage Ratio (LCR)

Our data continues to demonstrate that gold has maintained its high profile as a candidate for High- Quality Liquid Asset (HQLA). LBMA will continue to publish liquidity and other statistics that will help support the case for gold being considered HQLA at a Basel level.

Trade Data

LBMA trade data in 2021 shows a decrease in volumes from 2020. The data across all sources now show volumes returning to pre-pandemic levels. Total gold volumes for YTD 2021 are in the region of $116 billion average daily volume, compared to $112 billion in 2019 and $136 billion in 2020.

In addition to their publication on the Bloomberg terminals, we are pleased to see that LBMA trade data can now be accessed on Refinitiv terminals. The service is also available from Nasdaq, who provide and manage the service in partnership with LBMA. Some new features have been added to include price information for spot, option strikes and loan lease deposits.

Global Precious Metals Code (The Code)

In November 2021, The Code was also formally recognised by the UK Financial Conduct Authority, which was welcomed by LBMA.

The Code sets out the standards and best practice expected from market participants in the global OTC wholesale precious metals market. The first version was published in 2017, and all LBMA members have continued to support the implementation of the requirements under the Code.

Looking ahead, LBMA will be setting up working groups to update the Code and make sure it continues to remain relevant to the global precious metals market.

International Bullion Centres (IBCs)

A global effort among all the value chain actors, national authorities, and law and enforcement agencies is required to continue addressing the outstanding supply chain challenges and risks. In November 2020, LBMA wrote to 12 major International Bullion Centres (IBCs)* with recommendations to encourage consistency in responsible sourcing standards across these major trading hubs. The IBCs operate important market infrastructure for bullion trading activities.

The breadth of the activities undertaken within these IBCs and the involvement of international counterparties mean that these centres can be vulnerable to responsible sourcing risks. Over the course of 2021, LBMA undertook bilateral outreach with all the IBCs. An initiative of this magnitude requires extensive collaboration between many actors and will take time to achieve its objectives.

Since sending the initial letter, all 12 IBCs have been supportive of LBMA’s initiative and are proactively developing their own agendas to support the development of responsible sourcing practices. In addition, the OECD engaged directly with all 12 centres, starting with a meeting in May 2021 to further their countries’ work on implementing the OECD Due Diligence Guidance.

Furthermore, LBMA, together with an external consultant, is developing a methodology to help review the responsible sourcing progress in each IBC. This will help the LBMA’s constructive dialogue with each centre in 2022 and will help continue to provide integrity, trust and confidence in the international market.

*China, Hong Kong SAR, India, Japan, Russia, Singapore, South Africa, Switzerland, Turkey, UAE, UK and USA.

The IBC Recommendations focus on three strategic priorities

1: The responsible sourcing of recycled gold
2: The elimination of cash transactions
3: The provision of support for Artisanal and Small-Scale Mining (ASM)

Technology Developments

Digital Gold

Throughout 2021, LBMA organised a series of webinars, focusing on the development of digital gold and how blockchain technology can help to digitise gold.

24k gold CPU and motherboard chipset components

The webinars provided more context on the benefits of digital gold and, in particular, how this can help make gold more accessible to a broader range of participants. It was highlighted that digital gold will eventually be highly liquid, cost-effective and allow access on a scale not seen before. However, while some digital gold projects have gained a lot of momentum, overall market share is still relatively small.

It was argued that time is needed, and support from mainstream exchanges, regulators and sovereign vaults is required before digital gold can be meaningfully embraced. Look out for further webinars in our ongoing programme, and listen to what the experts have to say and understand the detailed insight into the benefits and challenges that the market is facing.

Gold Bar Integrity

This year, LBMA launched its Security Feature specifications application process, enabling vendors of security features for gold bars, as well as users of existing security features, to benchmark their respective solutions.

All applications will be reviewed by the Technical Review Panel, a group of experts, who will assess whether the Security Feature will meet the LBMA specifications. This process forms part of the Gold Bar Integrity (GBI) initiative to enhance the integrity of the physical gold market by ensuring gold bars entering the market are genuine and have a known provenance.

The Security Feature specifications, which were launched in 2020, will integrate with a bar database solution (currently under consultation) that will track and trace the life cycle of a bar.


Following the withdrawal of the UK from the EU, the EU REACH Regulation has been brought into UK law in the form of UK REACH, which retains key principles of the EU REACH Regulation.

LBMA has been working with a consultant, Caroline Braibant, to create guides and support Members with compliance with UK REACH. Three submissions were needed to be prepared and submitted to the Health and Safety Executive (HSE) in 2021 as a first step of compliance: grandfathering REACH dossiers submitted under EU REACH, downstream user importer notification (DUIN) and article 26 inquiry.

Although the deadlines have past, HSE has agreed to grant an extension for the grandfathering submission. As regards the DUIN submission, this is likely to also require an extension in order for/to allow for all Members to comply with this obligation.


The LBMA gold price auction, administered by ICE Benchmark Administration (IBA), now has 16 direct participants, and the silver price auction 13, with participants located in Asia, Europe and North America. This follows the addition of one new direct participant, DRW Investments, who joined both auctions in May, 2021.

The LBMA gold and silver price auctions have performed extremely well in 2021, despite the challenges of global pandemic with the benchmarks continuing to remain liquid, reliable, transparent and robust.

Gold monthly gross volumes passing through the auction in October 2021 were approximately 161k oz, broadly in line with volumes at the start of 2021.

In February 2021, IBA completed the cessation for all non-USD prices, except for EUR and GBP, following a period of consultation with the market. IBA continue to have excellent and regular dialogue with the participants of both auctions.

Source: ICE Benchmark Administration