 "A saleswoman shows a gold earring to customers at a jewellery showroom in Mumbai. Photo: Reuters")
The London Metal Exchange (LME) will soon offer trading in precious metals. The contract — LMEprecious — will be launched in the first half of 2017, following integration and testing with participants. It would also require regulatory approval.
The LME has tied up with the World Gold Council (WGC) and a host of global banks and consultancy firms to introduce contracts in precious metals. WGC and LME, with Goldman Sachs, ICBC Standard Bank, Morgan Stanley, Natixis, OSTC and Societe Generale, announced their plan to introduce a suite of exchange-traded and centrally-cleared precious metals products. LME currently offers trading in base metals, plastics and steel contracts.
LME said this initiative would support and aid ongoing regulatory changes. LMEprecious will be developed to accommodate the interests of all stakeholders and to reinforce the strengths of the London market. “We are delighted to be working with the World Gold Council and a group of leading banks to now take this project forward towards an enhanced market structure. LMEprecious opens up trading opportunities for existing LME members and their clients, as well as for new participants wishing to take advantage of optimised precious metals trading,” said Garry Jones, chief executive officer, LME. Discussions are taking place with a number of other leading institutions that have indicated their strong support for this initiative. “This is another important step in the modernisation of the gold market. It will strengthen London’s position in the global gold market, enabling it to meet the needs of all participants, attract new players and satisfy the highest standards of regulatory compliance. We are proud to have been the catalyst for this process, defining the new trading capabilities and driving market engagement. We are confident that the new offering will be successfully implemented and supported by the market,” said Aram Shishmanian, chief executive officer, WGC.
LMEprecious will comprise spot, daily and monthly futures, options and calendar spread contracts for gold and silver. Future developments will include platinum and palladium contracts. All trading will be centrally cleared on LME Clear and leverage the London market’s existing delivery infrastructure.
The new product suite will complement the bilateral over-the-counter (OTC) market, offering participants similar levels of execution flexibility, including the ability to bring bilaterally negotiated (phone-based) trades into clearing. Market participants will also benefit from tight on-exchange price discovery and a product model designed to maximise capital efficiencies.
The banks participating in this initiative will act as liquidity providers for the precious contracts to ensure efficient price discovery and establish market depth. Additional market participants are openly invited to participate in supporting and sharing in the success of the new contracts.
The LME has tied up with the World Gold Council (WGC) and a host of global banks and consultancy firms to introduce contracts in precious metals. WGC and LME, with Goldman Sachs, ICBC Standard Bank, Morgan Stanley, Natixis, OSTC and Societe Generale, announced their plan to introduce a suite of exchange-traded and centrally-cleared precious metals products. LME currently offers trading in base metals, plastics and steel contracts.
LME said this initiative would support and aid ongoing regulatory changes. LMEprecious will be developed to accommodate the interests of all stakeholders and to reinforce the strengths of the London market. “We are delighted to be working with the World Gold Council and a group of leading banks to now take this project forward towards an enhanced market structure. LMEprecious opens up trading opportunities for existing LME members and their clients, as well as for new participants wishing to take advantage of optimised precious metals trading,” said Garry Jones, chief executive officer, LME. Discussions are taking place with a number of other leading institutions that have indicated their strong support for this initiative. “This is another important step in the modernisation of the gold market. It will strengthen London’s position in the global gold market, enabling it to meet the needs of all participants, attract new players and satisfy the highest standards of regulatory compliance. We are proud to have been the catalyst for this process, defining the new trading capabilities and driving market engagement. We are confident that the new offering will be successfully implemented and supported by the market,” said Aram Shishmanian, chief executive officer, WGC.
LMEprecious will comprise spot, daily and monthly futures, options and calendar spread contracts for gold and silver. Future developments will include platinum and palladium contracts. All trading will be centrally cleared on LME Clear and leverage the London market’s existing delivery infrastructure.
The new product suite will complement the bilateral over-the-counter (OTC) market, offering participants similar levels of execution flexibility, including the ability to bring bilaterally negotiated (phone-based) trades into clearing. Market participants will also benefit from tight on-exchange price discovery and a product model designed to maximise capital efficiencies.
The banks participating in this initiative will act as liquidity providers for the precious contracts to ensure efficient price discovery and establish market depth. Additional market participants are openly invited to participate in supporting and sharing in the success of the new contracts.
