London Gold Futures Market
All images from the LGFM 1982 brochure
The London Gold Futures Market started trading on 19th April 1982. It was a joint venture between the London Gold Market and the London Metal Exchange, and its trading floor was located in the lower ground floor of Plantation House in Mincing Lane – the home of the LME. Unlike the LME’s principal-to-principal contract at the time, the LGFM contract was cleared through a clearing house – the International Commodities Clearing House (ICCH), which was owned by six major clearing banks.
The floor members had desks and telephone booths arranged in a ring (or more accurately a square), as can be seen below.
According to the LGFM brochure, the justification for establishing the market was to provide a formally organized gold futures market operating in line with those established in Winnipeg, Chicago, New York, Singapore, Sydney, Tokyo and Hong Kong. The establishment of the futures market in the UK had been made possible by the lifting of exchange controls in 1979.
It is interesting to compare the various lists in the brochure (Floor Members, Acceptable Refiners and Acceptable Vaults) with the corresponding lists of LBMA members some 40 years later.
According to the LGFM brochure, the justification for establishing the market was to provide a formally organised gold futures market operating in line with those established in Winnipeg, Chicago, New York, Singapore, Sydney, Tokyo and Hong Kong. The establishment of the futures market in the UK had been made possible by the lifting of exchange controls in 1979.
It is interesting to compare the various lists in the brochure (Floor Members, Acceptable Refiners and Acceptable Vaults) with the corresponding lists of the LBMA some 40 years later.
Floor Members
Many of these members have disappeared due to their no longer trading precious metals. Many have been absorbed into other larger entities. However, a relatively small number continue to trade gold under the same name as is shown on the list.
Somewhat similarly with the list of Acceptable Refiners, which was copied directly from that of the London Gold Market, there are almost as many names that have disappeared from the list as have remained on it.
There are no longer any Good Delivery gold refiners in the UK, France or the Netherlands, and none of those shown under ‘U.S.A.’ are still listed by LBMA. On the other hand, the LBMA Good Delivery List now includes refiners from many other countries, especially in Asia.
In contrast to the 400 troy ounce bars used to settle trades in the London Gold Market, settlement of the LGFM 100 fine troy ounce contract by physical delivery could only be made using either a 100-ounce bar or by three kilobars with finenesses of 995, 999 or 999.9.
But gold futures trading in London did not prove to be a success, even after it switched to a dollar base after six months of trading. Neither did the options contract, which was introduced in March 1983, and the LGFM ceased to operate in early 1985.
