The London Bullion Market Association Thursday launched the 'Global Precious Metals Code' in a bid to bring more transparency to the over-the-counter gold market in face of tightening regulation.
"The code is intended to define a robust, fair, effective and transparent market where all participants are able to transact following best practice guidelines," the LBMA said in a note to clients.
It sets out a common set of principles to promote the integrity and effective functioning of the global market covering ethics, governance, compliance and risk management, information sharing and business conduct, according to the trade body.
All market participants involved in the global wholesale precious metals market are expected to act according to the new mandate.
"LBMA members will be required to attest their conformance with the code by signing a 'Statement of Commitment'," the LBMA said.
"The code is an important step forward to build greater trust, consistency and transparency throughout the market. I would strongly encourage all participants in the global precious metals markets to follow the principles it sets out," LBMA Chairman Paul Fisher said.
The London gold market has been in the firing line of regulators over the past couple of years, with the LBMA transitioning pricing mechanisms to new electronic platforms in partnership with third parties.
ICE now runs the LBMA Gold Price, with the London Metal Exchange administrating the LBMA Platinum and Palladium settlements.
Still, it has not all been plain sailing.
Back in early March CME and Thomson Reuters threw in the towel, both stepping away from the calculation and administration of the LBMA Silver Price auction.
CME and Thomson Reuters have been operating/administering the LBMA Silver Price since 2014.
Sources said the main issue was the lack of participation in the number, and the fact that the banks involved have been scared off by regulation and therefore don't have the willingness to step in if the price does disconnect -- in case of increased scrutiny.
Many have called for the LBMA Silver Price to be centrally cleared to boost participation.
Current participants are China Construction Bank, HSBC Bank USA NA, JPMorgan Chase Bank, Morgan Stanley, The Bank of Nova Scotia - ScotiaMocatta, The Toronto Dominion Bank and UBS AG, according to the LBMA website.
CME and Thomson Reuters continue "to operate and administer the auction until a new provider is appointed, in order to avoid any disruption to the market and to ensure a seamless transition."
That tender recently closed with ICE, LME and one Fintech company said by sources to be seeking to take on the administration role.
