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Developments in the LBMA Gold Price

By Matthew Glenville, COO, ICE Benchmark Administration

Published on March 9, 2017

Since taking over responsibility for the London Gold Price in March 2015, ICE Benchmark Administration (IBA) has been at the forefront of developments in the gold market. In this article, COO Matthew Glenville, discusses the latest developments in the LBMA Gold Price.

In 2015, IBA successfully transitioned the former London Gold Fix from a conference call to the independently administered, transparent and electronic auction process, which now underlies the LBMA Gold Price.

Running the Gold Auction

IBA runs two electronic, tradeable auctions each day at 10.30 a.m. and 3.00 p.m. London time for unallocated, Loco London spot gold. IBA publishes the price for the final round as the LBMA Gold Price. The price formation is in USD and the final price is converted into the benchmark in multiple currencies including Australian dollars, British pounds, Canadian dollars, euros, onshore and offshore yuan, Indian rupees, Japanese yen, Singapore dollars, South African rand, Swiss francs, Malaysian ringgit, Russian rubles, Thai baht, Turkish lira, and New Taiwan dollars.

When IBA took over responsibility for the LBMA Gold Price in 2015, we established an Oversight Committee to ensure the benchmark fulfils the needs of the market by evolving it based on market requirements and regulations. The Gold Oversight Committee includes a diverse cross section of the market, including benchmark users, market infrastructure providers, participants and representation from IBA.

Strengthening the Benchmark

IBA has grown the number of participants from four to 14, including four Chinese firms. Volumes have more than doubled and our first indirect participant recently joined, with more expected to follow in the coming months. Growing and diversifying participation in the gold auction, both geographically, and across the industry has been key to strengthening the credibility of the LBMA Gold Price.

Firms have several ways to participate in the auction:

  • As a Direct Participant – Direct Participants can trade and settle with the other Direct Participants, and who usually place orders in the auction for their clients and for their own proprietary business.
  • As a client of a Direct Participant – clients call or send in orders via Direct Participants.
  • As an Indirect Participant – Indirect Participants are clients of Direct Participants, but they have their own screen to the system (WebICE) and manage their own order entry.

As the administrator, operating and supervising the auction is part of our daily routine at IBA. However, our role extends beyond the daily production of the benchmark price. We are continuously working to raise the credibility of the benchmark through increased participation and volumes in the auction, high quality benchmark administration, improved governance and oversight and looking at new developments which enable us to adapt to market needs.

New Developments in the Gold Market

In March 2017, IBA will introduce central clearing to the gold auction, marking the latest development in the LBMA Gold Price auction. Central clearing will be enabled by the ICE’s new London Gold daily futures contract for Loco London Gold, which launched on 30 January 2017. The new contract trades on ICE Futures US and is centrally cleared through ICE Clear US while delivering unallocated Loco London gold.

In October 2016, in response to increased demand from Asian markets, we announced our plans to work with SBMA and LBMA on a feasibility study to run an additional auction to take place during the Singapore trading day. This auction would run to the same specification as the existing LBMA Gold Price auctions in London (see “How the LBMA Gold Price is Set”).

In addition to the feasibility study, to reflect the growing interest in the gold market in the region, since November 2016, IBA has published the LBMA Gold Price benchmark in prices per ounce and prices per gram in the following additional currencies: Singapore dollars, Australian dollars, Canadian dollars, Swiss franc, onshore and offshore yuan, Indian rupees, Japanese yen and South African rand. In February 2017, IBA added the following currencies: Malaysian ringgit, Russian rubles, Thai baht, Turkish lira, and New Taiwan dollars.

More information on the LBMA Gold Price is available at https://www.theice.com/iba/lbmagold-price.

How the LBMA Gold Price is Set

The LBMA Gold Price benchmark is published twice a day using the price from the final round of each gold auction. The gold auctions start at 10:30 a.m. and 3:00 p.m. London time and are run on the WebICE electronic trading platform.

The auctions provide a market-based platform for buyers and sellers to trade unallocated Loco London spot gold. The price discovery is in USD and, at the end of the auction, the USD per ounce price is converted into the LBMA Gold Price in multiple currencies including: Australian dollars, British pounds, Canadian dollars, euros, onshore and offshore yuan, Indian rupees, Japanese yen, Singapore dollars, South African rand, Swiss francs, Malaysian ringgit, Russian rubles, Thai baht, Turkish lira, and New Taiwan dollars.

The auctions run in rounds lasting 30 seconds. At the start of each round, IBA publishes the price for that round and then participants enter their buying and selling volume. At the end of the round, if the difference between the buying and selling volume is within the imbalance threshold (10,000 ounces), then the auction is finished and the price is set. If the difference in volume is larger than the imbalance, IBA announces a new price and begins a new auction round.

Orders carry over from round to round and participants can cancel or adjust their orders at any time during the rounds. The minimum order size is 1 ounce, to allow client orders to be exactly represented. Participants can place as many orders as their business requires. Any imbalance is shared equally between the Direct Participants.

Matthew Glenville is the Chief Operating Officer of ICE Benchmark Administration (IBA), an independently capitalised subsidiary of Intercontinental Exchange, Inc, which administers the following systemically important benchmarks: ICE LIBOR, the LBMA Gold Price and ICE Swap Rate, and the ISDA SIMM Crowdsourcing facility. Prior to joining IBA in early 2014 Matthew spent seven years working for RBS and Bank of America. Matthew has a bachelor’s and master’s degree from Oxford University in Physics and Philosophy.

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Lee Jia Yi

OPERATIONS & ADMIN EXECUTIVE
Before joining SBMA, Jia Yi worked as an Admin & Reporting Officer in her previous role. She holds a Diploma in Business & Social Enterprise from Ngee Ann Polytechnic. Jia Yi is responsible for managing and maintaining physical and digital files in SBMA, supporting invoicing processes, reconciling receivables and payables, coordinating meetings and conferences. Additionally, she will provide support to the team and assist the Business Director in managing the Association’s office operations and general administrative activities.

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Emily Oh

OPERATIONS & ADMIN EXECUTIVE
Emily Oh is the Operations & Admin Executive, a seasoned professional who values teamwork and effective communication. She is skilled at adapting to new challenges and takes a proactive and resourceful approach to every task. Before joining SBMA, Emily had experience coordinating international travel arrangements and spearheading community initiatives. Her role at SBMA will be providing operational and administrative support for projects and other matters to the team.

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Clara Chang

MARKETING & COMMUNICATIONS EXECUTIVE
Clara Chang joins SBMA as the Marketing & Communications Executive, enriching the team with her extensive experience in content creation, social media management, and digital marketing. Prior to joining SBMA, Clara held the position of Marketing Executive at her previous job. She holds two bachelor’s degrees from the University at Buffalo, one in International Trade and another in Geographical Information Science. Her core duties will include maintaining the SBMA website, managing the quarterly Crucible newsletter, among other responsibilities.

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Mr John Levin

Global Metals
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John Levin is the Head of Metal Sales & Trading – APAC at the Toronto Dominion Bank’s Singapore office. Prior to this role, he devoted seven years to leading precious metal sales for the ANZ banking group in his home country, Australia. Notably, from 2009 to 2011, John played a significant role on the management committee of the London Bullion Market Association while serving as the Head of Precious Metals Sales for HSBC Global Banking and Markets in the UK.

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Fabian Lew

MARKETING & COMMUNICATIONS OFFICER

Fabian was a Business Development and Marketing Associate before joining SBMA. He graduated from Singapore Management University with a Bachelor’s degree in Economics.

He has joined SBMA since February, 2022.

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Margaret Wong

BUSINESS DIRECTOR

Margaret Wong, Business Director at SBMA (Singapore Bullion Market Association), brought valuable experience from her previous role at the World Gold Council (WGC). Her tenure at WGC provided her with extensive exposure to the gold community in Singapore and the broader region. This background has been instrumental in establishing strong working relationships within the industry.

Margaret’s role at SBMA encompasses a diverse range of responsibilities. She oversees office management, business support processes, finance, and administrative functions essential for the smooth operation of the team and management committee. Additionally, Margaret handles membership matters, member communications, and addresses public inquiries related to SBMA.

One of Margaret’s key responsibilities is coordinating with the Event Management Company for SBMA’s prestigious annual event, the Asia Pacific Precious Metals Conference. This flagship conference plays a crucial role in the industry, making her involvement pivotal in its success.

Described as resourceful and self-motivated, Margaret Wong brings a wealth of skills and experience to her role at SBMA, ensuring efficient operations and effective engagement within the precious metals community in Singapore and beyond.

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Albert Cheng

Chief Executive Officer

Albert Cheng joined the World Gold Council in March 1993 as a Regional Manager, becoming Managing Director, Far East in 2003. He retired at the end of March 2015 and was subsequently named its Advisor. He has also been an International Advisor to the Shanghai Gold Exchange since 2002.

His marketing career began with Dentsu Young & Rubicam, Hong Kong in the early 80’s. He began gold marketing in July 1985 when he joined the Royal Canadian Mint as a Regional Manager for Southeast Asia.

He was appointed honorary CEO of SBMA in November 2015. He is responsible for the success and strategic development of SBMA, represents the interests of the Association, and is responsible for all the legal and regulatory aspects of the work of the Association. He is the primary contact for regulators and government bodies on bullion market development.

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Ms Pawan Nawawattanasub

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Mr Shaokai Fan

Head of Asia-Pacific (ex China) and Global Head of Central Banks
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Mr Alan Liew

Head of Bullion & Commodities Trading
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Mr Nikos Kavalis

Managing Director
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Mr Nuttapong Hirunyasiri

CEO
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Mr Raman Walia

Executive Director, Head of Commodities Sales – APAC
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Raman is Executive Director and Head of Commodities Sales, APAC, for J.P. Morgan. He joined JPMorgan in 2008 in New York, moved to Singapore in 2011, and helped expand the precious metals business in the region. Raman has an MBA from Cornell University, and likes to travel in his spare time.

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Mr Andrew Clarke

Head of Brink’s Global Services
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Mr Kazuya Naoki

Head of Metals, Asia
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Kazuya (Kaz) Naoki is the Head of Metals, Asia of ICBC Standard Bank in Singapore and is responsible for the precious & base metals sales and trading in the region. He joined Standard Bank Plc Tokyo Branch in 2008 and was relocated to its Singapore Branch in 2013 whose controlling stake was acquired by the Industrial and Commercial Bank of China in 2015. Prior to joining Standard Bank, Kaz spent 11 years focusing on commodity trading and risk management with Mitsui & Co in Tokyo, Sydney and London. Kaz has been serving on the SBMA Management Committee since 2016.

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Mr Vinh Nguyen

Head of Precious Metals, Asia
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Vinh Nguyen joined StoneX Group in Singapore at the beginning of 2008 and responsible for its APAC precious metals activities since 2019 until now.

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Mr KL Yap

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KL YAP is the General Manager of Metalor Technologies (Singapore) Pte Ltd’s Singapore Refining Business Unit. He joined Metalor in 2013, initially in Refining Sales. In 2014, he became Refining Business Unit Manager, leading the development of a new precious metal refinery. KL was Vice Chairman of SBMA from 2017 to 2021, now serving as Chairman. With a degree in business commerce, finance, and marketing, he brings prior experience from refinery and heavy industries.