Five banks open the Trillion dollar Gold Club
Trillion Dollar Gold Club Members:
The five banks that handle all the transactions in London’s $6.8 trillion annual gold market are changing clearinghouse rules to make it easier for new entrants to participate.
These reforms are a measure of a broader reform of the institutions backing the world’s largest bullion trading hub, increased transparency after accusations of price gouging by banks and dealers and pressure from regulators.
With this mounting pressure, the number of banks clearing gold transactions through a company they own called London Precious Metals Clearing Limited has dropped from seven to five. These are HSBC, JPMorgan, Scotiabank, UBS and ICBC Standard.
A number of banks have tried to join this exclusive group in recent years. ICBC Standard joined in 2016 after several months of disputes over its terms, and at least one other request from Goldman Sachs was rejected, LPMCL member banking sources said.
HSBC spokespersons J.P. Morgan, Scotiabank, UBS and ICBC Standard declined to comment. A Goldman Sachs spokesperson declined to say whether his request was denied.
by opening the company to new members this could make the Gold market even more competitive.
When questioned about these changes, Chief Executive of the London Bullion Market Association (LBMA), Ruth Crowell, which provides administrative services to LPMCL, told Reuters in a statement sent via email that LPMCL was recently restructured.
“One of the benefits of the new structure has been to make the LPMCL more accessible to new members and to clarify the entry requirements,” Ruth Crowell said. LPMCL’s member banks are considering changes to their rules as there has been a lack of transparency and good governance in LPMCL since the external advisory review began nearly three years ago, according to four member bank sources.
They formed a new company, LPMCL, in September to replace an existing company of the same name, according to documents filed with Companies House, the British business registry.
Crowell stated that the LPMCL “has recently restructured to reflect the changing corporate and regulatory climate since the Company was incorporated in 2001.”
Ruth Crowell noted that the reorganization “was designed to improve transparency, access to join and the corporate governance of the LPMCL, as well as to provide additional safeguards to the market in the form of revised rules incorporating the latest anti-bribery and corruption provisions.”
Source: CNBC / Reuters
