Developments in bullion markets. Sakhila Mirza General Counsel, LBMA

Transcription

1 Developments in bullion markets Sakhila Mirza General Counsel, LBMA

2 LONDON BULLION MARKET Key Elements Focused on the Loco London Contract but with a global membership and client base Largest Financial Market in the world LBMA Good Delivery Vaulting Services Clearing System Good Delivery Metal Accounts LPMCL Metal Accounts, Clearing System Vaulting LBMA & LPMCL Benchmarks Benchmarks LBMA & 3 rd Party Administrators Page 2 The LBMA & The London Bullion Market

3 ROLE OF LBMA Trade Association (not an exchange) Maintaining & Enhancing the efficiency of the London Market for Gold and Silver Bullion Accreditation Metal Quality The Good Delivery System Membership Market Development Regulatory Response Conferences & Seminars Statistics, Documentation & Information Ad-hoc Projects (Silver Price, Responsible Gold, Certified Reference Materials etc.) Communication Contacts with Regulators and government agencies Principal OTC Market contact for media, investors & public Page 3 The LBMA & The London Bullion Market

4 LBMA GOOD DELIVERY LIST List of refiners and their bars which are accepted in London Covers only large bars (~400 trozor ~ 12.5 kg for gold) The first List published by the London Gold Market was in 1934 The List is used by many markets for defining deliverable brands Non-technical criteria that must normally be satisfied before accepting an application for assessment Page 4 Details of Owners and Directors In business for 5 years with an operating history of 3 years tangible net worth - 15 m Refined production 10 tonnes pa Assaying test 24 gold reference samples Bar test -11 bars inspected in London; 5 bars tested by each of two referees (double blind)

5 GOOD GOLD DELIVERY REFINERS LBMA Refiners ~85-90% of annual world gold production. The List is widely recognized as the de facto standard for the quality of gold and silver market bars and is used by precious metal exchanges around the world to define in whole or in part the refiners whose gold and silver bars are accepted in their own markets. Page 5

6 LBMA RESPONSIBLE GOLD GUIDANCE Since 2012, Responsible Gold Guidance audit is required To ensure London Market is free from metal that had financed conflict or been used for money laundering or terrorist financing. Global, long term focus. OECD + KYC, AML + mandatory audits = LBMA Responsible Gold All feedstock (mined production, scrap, investment bars) subject to due diligence and audit. Risk-based: Higher risk = more due diligence is needed (and vice versa) All production (large bars, kilo bars, scrap etc.) therefore conflict-free. Page 6 Focuses on conflict-free process, not conflict-free product.

7 RESPONSIBLE GOLD GUIDANCE Audit Implementation Third Party Audit Guidance The Third Party Audit Guidance provides transparency and consistency for the Responsible Gold programme. Mandatory to send Responsible Gold Audit Report every year, covering 12 months production List of Recommended Auditors (also known as Recommended Service Provider (RSP)) The LBMA has published a list of RSP Mandatory to use a RSP Any independent, certified auditors are eligible to conduct the LBMA audit, provided they have the required credentials. Where applicable, authorised government institutions may also carry out audits. Refiners must communicate which government institution is conducting the audit to the LBMA Physical Committee prior to the audit as well as make this information public after the audit. Page 7 LBMA Responsible Gold

8 GOLD INDUSTRY INITIATIVES Support & Recognition throughout gold supply chain Miners Refiners Jewellers RJC Chain of Custody Covers All Actors Page 8 LBMA Responsible Gold

9 EU CONFLICT MINERALS UPDATE Draft Regulation final expected 2015 Regulation on Responsible Sourcing of minerals from conflictaffected and high-risk areas (global focus) Requirement for all importers of gold into the EU (including bullion & coins). All banks and other downstream participants to arrange an independent third party audit under the draft regulation EU plans to publish an EU Audit standard for all downstream audits in member states Page 9 LBMA Responsible Gold

10 LBMA PRECIOUS METAL PRICES Moving from Historic to New Prices Enhancements Electronic Auction Platform Independent Administrator with IOSCO & Regulatory compliance Increased transparency of live auction available to public Increased direct participation Motivation for Change Negative perception of the word Fix or Fixings LIBOR scandal & subsequent legislation Decreased number of contributors, Fixing Companies Announcement Consultations & Challenges Silver Price three months, RFP process & implementation Gold Price RFP process, implementation & UK Regulation Page 10

11 LBMA SILVER PRICE Administrated by Thomson Reuters, CME Group Calculation Platform Daily Spot Price for London Market CME Group provides the electronic auction platform on which the price is calculated. Thomson Reuters is responsible for administration and governance. The LBMA accredits price participants and owns the intellectual property rights Page 11 LBMA & Responsible Gold Open to New Participants

12 LBMA PRECIOUS METAL PRICES Overview Silver launched 15 August 2014 Platinum and Palladium launched 1 December 2014 Gold Launched 20 March 2015 All electronic auction based, different administrators New LBMA subsidiary company Precious Metals Prices Ltd. Metal Platform Compliance Participants Gold ICE Benchmark Administration 7 Silver CME Thomson Reuters Pt & PD LME 4 6 Page 12

13 Questions?