Background and High-Level Principles

1.1 Background and Purpose

1.1.1 Background

The Good Delivery List (“GDL” or “List”) has been developed and is maintained by the London Bullion Market Association (“LBMA”). All refiners on this List are referred to as Good Delivery Refiners “Refiners”). This List facilitates the international distribution and acceptability of Bars produced by those Refiners.

An entry on the List represents a Refiner at a specific location. Separate applications are required if an applicant wishes to register Bars produced by the same Refiner at different locations.

The List is the copyright of LBMA. Reproduction and any dissemination of the List (in whole or in part, in any form) is strictly prohibited without the express prior written consent of LBMA and any such use of the List by a Refiner must acknowledge LBMA’s copyright.

1.1.2 Purpose

The purpose of this Rulebook is to clarify the requirements that all Refiners are expected to comply with, both when applying to become accredited by LBMA and on an ongoing basis.

This Rulebook comprises of:

i. Principles that all Refiners must adhere to (Principles);

ii. Technical Specifications rules;

iii. Quality Assurance rules.

(ii) and (iii) together with this Rulebook, collectively referred to as the Rules.

Each specific Rule (R), where appropriate, is followed by Guidance (G) to provide further clarification in support of the Rule. Failure to observe the Guidance can also potentially impact a Refiner’s Good Delivery status.

Breaching a Rule or Rules can potentially lead to removal from the List, as highlighted in section 1.4 (Enforcement).

1.1.3 Changes to these Rules

LBMA reserves the right to amend this Rulebook at any point. Any amendments will be communicated in a timely way, and all Refiners will be provided with reasonable notice to implement and comply with the amendments.

1.2 Principles

The Principles represent the overarching spirit of the Rulebook. Breaching a Principle can potentially lead to removal from the List, as highlighted in section 1.4 (Enforcement).

• Principle 1 - Integrity: A Refiner must act with integrity, which includes adopting best practice and responsible business practices.
• Principle 2 - Skill, care and diligence: A Refiner must conduct its business with due skill, care and diligence.
• Principle 3 - Management and control: A Refiner must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.
• Principle 4 - Financial prudence: A Refiner must maintain adequate financial resources and records.
• Principle 5 - Market conduct: A Refiner must observe proper standards of market conduct.

1.3 Legal and Compliance

1.3.1 Applicable Laws

Refiners must comply with the laws, rules and regulations applicable to them and the precious metals market in each jurisdiction in which they operate or transact (“Applicable Laws”).

Refiners are responsible for adopting their own internal policies and procedures designed to comply with the Applicable Laws. In the event of a conflict between the Applicable Laws and these Rules, Applicable Laws will prevail.

LBMA recognises that Refiners may need to comply with national standards regarding the production of gold and silver Bars. To recognise such needs, LBMA attempts wherever possible not to be overly prescriptive in formulating these Rules. It is for this reason that some provisions in this Rulebook appear as guidance on best practice and should be adopted unless prohibited by national standards.

1.4 Enforcement

A Refiner may be suspended from the GDL or ultimately removed and transferred to the Former List if there is a persistent or serious breach of the Principles or Rules. The Executive Committee ultimately reserves the right to make this decision, at its discretion, following a review process.

Examples of such breaches include but are not limited to:

• A Refiner changes ownership and the new owners are unable to provide satisfactory evidence of their bona fides;
• A Refiner’s tangible net worth falls consistently below the minimum threshold;
• A Refiner’s production of refined metal falls consistently below the minimum threshold specified;
• A Refiner fails to maintain the technical standards outlined in this Rulebook;
• A Refiner ceases production or asks to be transferred to the Former List at its own request;
• A Refiner does not respond adequately to justifiable customer complaints;
• A Refiner is subject to insolvency proceedings;
• A Refiner is subject to Criminal or Civil sanction(s) that LBMA believes could bring Refiner into disrepute or could cause reputational damage to LBMA;
• An event, circumstance, condition or change occurs, which materially and adversely affects, or could reasonably be expected to materially and adversely affect the Refiner’s business.

If a Refiner is transferred to the Former List, the Bars that it produced prior to the date of transfer may still be considered Good Delivery, unless the reason for the transfer to the Former List is due to a breach of Responsible Sourcing and/or trade and economic sanctions. LBMA reserves the right to de-list Bars after an appropriate period in cases where production has ceased.

A previously-listed Bar (as defined by its dimensions and marks) may be transferred to the Former List for one or more of the reasons listed below, while the Refiner continues to be listed but with a modified Bar:

• The form or dimensions of the Bar do not meet current requirements;
• The Bar’s marks or dimensions have been modified. For example only, a Refiner may change the layout of the marks on its Bar from a portrait to a landscape format. Other reasons for such changes include but are not limited to rebranding by the Refiner (e.g. using a new logo) or a change of ownership (e.g. a new name).

Bars are listed at the discretion of the Executive Committee which reserves the right to make any investigations that it deems appropriate into an applicant for listing.

1.5 Suspension and Reinstatement

1.5.1 Suspension

A suspended Refiner will be transferred to the Former List when its suspension from the GDL goes beyond a 12-month period without a satisfactory resolution.

Within a 5-year period, if a Refiner is suspended from the GDL twice, a further suspension will not be applicable and the Refiner will be transferred to the Former List.

1.5.2 Reinstatement

When the reason(s) for the suspension are satisfactorily resolved, the Refiner may apply for its GD status to be reinstated as follows:

1. an application for reinstatement within 3 years from the date of transfer to the Former list, following a 12 month suspension period will be subject to, but not limited to, compliance with the:
   
   - Requirements of the RSP, including undertaking a responsible sourcing audit covering the suspension and Former List period
   
   - LBMA Due Diligence process
   
   - Proactive Monitoring Programme
   
   
2. an application for reinstatement after 3 years from the date of transfer to the former list, following a 12 month suspension period will be required to undergo the full GD Application Process.

1.5.3 Good Delivery Bars

Where suspension from the GDL was a result of trade and economic sanctions, in the event that the Refiner is reinstated to the GDL, bars produced during the suspension period will not be considered Good Delivery following reinstatement.

The LBMA Physical Committee reserves the right to make the final decision.

1.6 Escalation

Refiners are expected, at the earliest opportunity possible, to inform the Chief Technical Officer or Head of Good Delivery (together the "GDL Team") if there has been a breach of any of the Rules or Principles of this Rulebook. Failure to communicate a breach may itself be considered to be a breach of these Rules and lead to potential enforcement in accordance with Section 1.4.