Gold Market Rife With Rumors Of Likely LBMA Partner

The bullion market was awash with rumors September 30 relating to the possible winner of the recent request for proposal by trade body the London Bullion Market Association, with Autilla a standout name as a possible contender to be awarded the contract to increase market transparency.

One source close to the situation said that the tech company appeared to be in a strong position to take the RFP and start trade reporting, among other things, in a bid to modernize the London market.

“It would be premature to comment at this stage as no legal agreements have been signed with any provider,” Ruth Crowell, chief executive of the LBMA, said in a generic email to the media.

The LBMA said February 4 that five service providers had made the final cut to submit an RFP to increase transparency in the London bullion market, widely believed to be CME Group, the London Metal Exchange, IntercontinentalExchange, Autilla/Cinnobar and Markit/ABS.

None of the parties, nor the LBMA, would comment on the specifics of the matter.

According to the trade body, “the purpose of these new services is to address the immediate regulatory, cost and growth requirements of the market, which will connect via a technology interface called the LBMA-i.”

There had been media reports that this list had been whittled down to three, although S&P Global recently learned from a source close to the situation that all five remain in the running.

Participants have become overall disgruntled by the process, which is now seen as cumbersome and disjointed, several sources ranging from bankers to brokers have expressed.

The LBMA have said that they will announce the selected party at its annual conference, this year in Singapore, mid-October.

Earlier this year Crowell told S&P Global Platts that the LBMA’s vision is to increase its power to be able to act, as a voice of the market, and represent its members should the need arise.

Crowell was responding to recent criticism from certain quarters that — as the industry body — it has been slow to respond to some situations.

Regarding the RFP process, Crowell said there is still a lot of work to be done; “if there were a simple solution, it would be implemented already.”

One source said that his money was on Autilla.

Speaking to Platts, Miguel Vias, head of precious metals at CME, said that the best path for success is definitely unity across the value chain from the miners to the refiners and any respective trade bodies.

On August 8 the World Gold Council said it’s gearing up to launch a suite of exchange-traded and centrally cleared precious metals products in partnership with the London Metal Exchange in a bid to regenerate London’s slipping dominance in global gold trading, potentially reducing costs and increasing liquidity.

As such, many believe that this discounts the LME from the RFP process.

Also part of the offering, called LMEprecious, are Goldman Sachs, ICBC Standard Bank, Morgan Stanley, Natixis, OSTC and Societe Generale. The banks will act as liquidity providers for the contracts to ensure efficient price discovery and establish market depth.

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.

Regarding the Autilla rumors, a source said, “There’s a lot of talk today. But no one has signed anything, as far as I know.”

He added if the rumors were true, “it would be a bold, innovative step by the LBMA and its members. A real sign of the benefits offered by FinTech companies over older, slower technology.”

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