The London Bullion Market Association (LBMA) is set to undergo a major review of the London gold market, with consultancy firm EY tasked with recommending potential developments, including the creation of a gold trading exchange in the city.
The study, commissioned by the LBMA, will focus on enhancing liquidity and transparency within the market, exploring the possibility of transitioning from the current over-the-counter system to a more structured exchange. While this shift is expected to be a longer-term project, the aim is to improve market efficiency and evolution in alignment with regulatory standards.
The report, expected to be delivered in the summer, precedes the upcoming Fair and Effective Markets Review (FEMR) report on fixed income, commodities, and currency trading markets in June. The initiative seeks to address concerns about benchmark rigging and maintain London’s position as a leading financial hub.
LBMA Chief Executive Ruth Crowell expressed the industry’s readiness for wholesale reform, proposing a tailored mechanism for reporting daily turnover and potential clearing following previous benchmark shake-ups. The regulatory spotlight on precious metals benchmarks has intensified post-Libor scandal, prompting changes in how the gold, silver, platinum, and palladium fixes are administered.
With banks stepping away from benchmark-setting processes, InterContinental Exchange and London Metal Exchange now oversee the London Gold Price, platinum, and palladium benchmarks. The administration of the electronic silver price benchmark is managed by CME Group and Thomson Reuters.
As the gold market undergoes a period of transition, stakeholders await the outcomes of the upcoming recommendations to shape the future landscape of London’s gold trading sector.
