Annual Report 2021
Financial Market Enhancements
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.
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.