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Unlocking Precious Liquidity & Beyond

By Ruth Crowell, Chief Executive, London Bullion Market Association (LBMA)

Published on September 20, 2019

RUTH CROWELL is responsible for the strategic development of LBMA, in partnership with the Chairman and the Board. She maintains accountability to and the quality of, the Association’smembership and Good Delivery refiners as well as representing LBMA’s interests in relation to regulators, investors, media and international precious metals markets. Prior to joining the LBMA, she worked in bank finance and US corporate law and also acted as a monitor at the UN Commission on Human Rights in Geneva.

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I am delighted to be writing for Crucible in what is the 25th anniversary of SBMA. We have always enjoyed working closely with the association on mutual areas of interest and wider industry initiatives. We are also always happy to support SBMA publications and events. In June, I attended and spoke at the Asia Pacific Precious Metals Conference and LBMA also sponsored the conference dinner. With this article, I thought that I would bring Crucible readers up to speed with some of the things LBMA has been doing as well as some of the things that have happened in the wider industry.

So far, 2019 has been another busy year for LBMA. One of our biggest news stories has been the publication of trade reporting for precious metals, which demonstrates the deep liquidity in the market that we always suspected but have been unable to prove. Our Responsible Sourcing Programme has also expanded to encompass new criteria for Environmental, Social and Governance goals.

It demonstrates that gold in particular is an attractive liquid asset, which compares very impressively against other asset classes and indeed even outperforms the Extremely High Quality Liquid Asset (HQLA).

LBMA-I TRADE REPORTING

LBMA launched its trade reporting service in November 2018 with the publication of weekly gold and silver trade reporting data through our LBMA-i online service that is provided and managed by NASDAQ (previously Simplitium). Since then, we have added further data sets including daily data for gold and silver, daily and weekly data for platinum and palladium as well as data on strike price and tenor.

LBMA-i market data makes it possible for market participants to gauge the size, shape and liquidity of the OTC market as represented by LBMA members. By enhancing transparency, LBMA-i is assisting the forward market and helping market participants better understand gross turnover and liquidity in loco London and Zurich.

This transparency of trade reporting data helps LBMA members understand their share of the OTC market but will also provide stronger support for regulatory lobbying, most notably Basel III’s Net Stable Funding Ratio (NSFR), where we are working closely with key stakeholders to gain a full exemption for precious metals and clearing. To date, the trade data has provided positive evidence of gold’s liquidity and the argument that NSFR should not apply to gold in the same way it does to other commodities.

Using this new trade reporting data, LBMA has undertaken an analysis of the liquidity of gold and the other three precious metals. This preliminary analysis has been compared against the European Banking Authority’s (EBA) data from its 2013 report and is set out in Table 1. It demonstrates that gold in particular is an attractive liquid asset, which compares very impressively against other asset classes and indeed even outperforms the Extremely High Quality Liquid Asset (HQLA).

Figure 1: Trade reporting weekly turnover (12 week moving averages to the period ending 01 September 2019).

Figure 2: Gold trade reporting – 12 week moving averages (million ounces).

Table 1: Liquidity assessment of gold and other precious metals

GOLD AND SILVER HELD IN LONDON VAULTS

Let’s not forget that underpinning the trading volumes is a significant amount of physical gold held in London vaults. As of April 2019, there was 7,650 tonnes of gold, valued at $315.4 billion and 36,067 tonnes of silver valued at $17.4 billion. This equates to approximately 612,025 gold bars and 1,202,222 silver bars. We publish the information on gold stored across the London vaults publicly on a monthly basis on our website.

CENTRAL BANK GOLD AGREEMENT WON’T BE RENEWED IN SEPTEMBER

The European Central Bank announced on 26 July that its 20-yearold Central Bank Gold Agreement was no longer necessary, and that the renewal due in September 2019 would not take place. This is a vote of confidence in the depth and liquidity of the global gold OTC market.

It is reassuring to see that signatory banks also confirm that gold remains an important element of global monetary reserves. This agreement dates back to 1999 and was designed to limit the amount of gold that was collectively sold by (mainly) European central banks to 400 tonnes per year. It was renewed in 2004, 2009 and 2014.

LBMA’S MISSION

Our mission is to ensure the highest levels of integrity, transparency and leadership for the global OTC market. If you are not already a member, come and talk to us. We’d love to tell you more about LBMA and how we can benefit your organisation.

At the start of 2019, the Board set a number of new targets for LBMA as part of its new three-year strategic vision. This requires us to extend our outreach to engage more closely with sectors of the market where LBMA is under represented, for example, the mining, investment and central bank communities. Our message is that LBMA is the voice, standard setter and quasi-regulator for the global OTC precious metals market.

SETTING THE STANDARDS

One of the key strengths of LBMA is establishing best practices and setting standards through its Responsible Sourcing Programmes, the Good Delivery List and the Global Precious Metals Code. These standards deliver integrity and credibility to the industry, which all LBMA members benefit from. We are continually striving to improve standards, with the latest iteration (Version 8) of the Responsible Gold Guidance introduced on 1 January, encompassing Environment, Social and Governance issues.

As we reflect back on the last 100 years of the Gold Price, we equally look forward to the future and the next 100 years. Today, the Gold Price continues to be set in London and remains the international benchmark price for the gold market.

LBMA’S MISSION

Our mission is to ensure the highest levels of integrity, transparency and leadership for the global OTC market. If you are not already a member, come and talk to us. We’d love to tell you more about LBMA and how we can benefit your organisation.

At the start of 2019, the Board set a number of new targets for LBMA as part of its new three-year strategic vision. This requires us to extend our outreach to engage more closely with sectors of the market where LBMA is under represented, for example, the mining, investment and central bank communities. Our message is that LBMA is the voice, standard setter and quasi-regulator for the global OTC precious metals market.

FIRST LONDON GOLD PRICE CENTENARY

This year 12 September 2019 marks the centenary of the first gold “fixing”, or what is now known as the LBMA Gold Price. On 12 September 1919, the Bank of England made arrangements with NM Rothschild & Sons for the formation of a free gold market and the establishment of a daily gold price.

The first “fixing” took place at 11 a.m. when the price of gold was settled at £4 18 s 9d by the five founding members: NM Rothschild & Sons (chair), Mocatta & Goldsmid, Pixley & Abell, Samuel Montagu & Co. and Sharps Wilkins. The bids were made by telephone for the first few days, but it was then decided to hold a formal meeting at New Court, the London offices of NM Rothschild & Sons (whilst the original building is no longer with us, the new Rothschild offices stand on the site).

As we reflect back on the last 100 years of the Gold Price, we equally look forward to the future and the next 100 years. Today, the Gold Price continues to be set in London and remains the international benchmark price for the gold market.

Since 1919 the price has evolved and modernised following the closure of the Gold Fixing Company in 2015, when responsibility for the administration and governance of the price was transferred to an independent administrator, ICE Benchmark Administration. The auction is no longer conducted by telephone but on an electronic platform to help enhance transparency and provide for independent governance. The auction now has 15 direct participants, with the potential to grow since central clearing was introduced in 2017.

It is important to restate that the benchmark is set when transactions between buyers and sellers are matched within a certain defined and published tolerance.

London, the world’s leading financial centre, remains at the heart of the price as it did 100 years ago. The guiding principle that all business, whether for large or small amounts, is conducted solely on the basis of a single published price remains as true today as it did 100 years ago. Clients around the world wishing to buy or sell precious metals may all do so at this price, which continues to be globally accepted as the basis for pricing a variety of transactions by all sectors of the international precious metals market. It is important to restate that the benchmark is set when transactions between buyers and sellers are matched within a certain defined and published tolerance. This is also as true today as it was 100 years ago.

LBMA IN ASIA

LBMA Asia representative Jeremy East, Senior Advisor
LBMA Asia representative Bonnie Li, Executive Assistant

LBMA continues to extend its global engagement in Singapore and throughout Asia via its arm in the Far East, LBMA Asia. Representing us in the region are Jeremy East, Senior Advisor and Bonnie Li, Executive Assistant (pictured above). Broader industry engagement is crucial to LBMA’s success in fulfilling its mission to represent the interests of the global precious metals industry.

Given that we are raising our profile in the region it is appropriate that our annual conference this year brings us to Shenzhen on 13 – 15 October. China is the most important producer and consumer of precious metals in the world so it is important that we engage closely with the market. We hope to see many of you there.

For further details about topics covered in this article as well as other issues, please visit www.lbma.org.uk.

RUTH CROWELL is responsible for the strategic development of LBMA, in partnership with the Chairman and the Board. She maintains accountability to and the quality of, the Association’smembership and Good Delivery refiners as well as representing LBMA’s interests in relation to regulators, investors, media and international precious metals markets. Prior to joining the LBMA, she worked in bank finance and US corporate law and also acted as a monitor at the UN Commission on Human Rights in Geneva.

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Singapore Bullion Market Association Secretariat-Lee-Jia-Yi

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.

SECRETARIAT SBMA-Emily-Oh

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.

SECRETARIAT SBMA Clara-Chang

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.

SBMA Committee-Photo-john-levin

Mr John Levin

Global Metals
TD Securities
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.

SBMA Secretariat-Fabian-Lew

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.

SBMA-margare-secretariat

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.

SBMA-Albert-secretariat

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.

Ms Pawan Nawawattanasub

Ms Pawan Nawawattanasub

CEO
YLG Bullion Singapore Pte Ltd

Pawan is the CEO of YLG Bullion Singapore and founder of YLG Bullion International. She has almost 40 years of experience in the jewellery industry and established YLG in Thailand in 2003. In 2012, she brought YLG to Singapore. She sits on the Board of Directors of the Thailand Gold Traders Association, the Thailand Futures Exchange’s Arbitration Committee, and the Rotary Bangkok committee. She holds a master’s degree in Political Science.

SBMA-Shaokai-Fan

Mr Shaokai Fan

Head of Asia-Pacific (ex China) and Global Head of Central Banks
World Gold Council
Shaokai Fan is the Global Head of Central Banks at the World Gold Council, responsible for advising governments on gold matters, and enhancing the gold market through engagement, dialogue, and thought leadership. He works directly with central banks and sovereign wealth funds on investment considerations. Prior to this position, Shaokai held multiple roles at Standard Chartered Bank, including Director for Asia Strategic Initiatives and Associate-Director for Public Sector coverage. Shaokai holds a Masters of Public Administration from Columbia University and the London School of Economics, and an undergraduate degree in finance and economics from New York University.

SBMA-Committee-Alan-Liew

Mr Alan Liew

Head of Bullion & Commodities Trading
United Overseas Bank Limited
Alan is Head of Bullion and Commodities Trading for Group Trading in Global Markets, United Overseas Bank (UOB). Alan joined UOB and started the bank’s commodities trading business in 2014, previously he spent eight years in Standard Chartered Bank (SCB) trading both precious and base metals. During his tenure at SCB, he obtained the SGE gold trader licence and was part of the pioneering team for the SGE business and the FX quantitative trading team. Prior to trading, he worked for Monetary Authority of Singapore in the Financial Risk Management Division. He holds a BSc (Hon) in Computer Science at National University of Singapore and a MSc in Financial Engineering at Nanyang Technological University.

SBMA-Committee-Nikos

Mr Nikos Kavalis

Managing Director
Metals Focus Singapore Pte Ltd
Nikos Kavalis is a founding partner of Metals Focus. He has over 20 years of experience in precious metals, having previously worked for the Royal Bank of Scotland and GFMS. Since September 2019, Nikos has been based in Singapore, where he also runs the local subsidiary of Metals Focus.

SBMA-Committee-khun nuttapong

Mr Nuttapong Hirunyasiri

CEO
MTS Gold Global Trading Pte Ltd
Nuttapong Hirunyasiri is the CEO of MTS Gold Group, one of Thailand’s top 10 companies and top 3 bullion companies. He started MTS Gold Group’s first overseas office in Singapore and has been expanding the group business internationally. He focuses on product development and innovation for gold investment, with the aim of being a leader in providing the full suite of gold investment services in the ASEAN region.

SBMA Committee-Photo-Raman-Walia

Mr Raman Walia

Executive Director, Head of Commodities Sales – APAC
JP Morgan Chase Bank N.A.

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.

SBMA Committee-Photo-Andrew-Clarke

Mr Andrew Clarke

Head of Brink’s Global Services
Brink’s Global Services Pte Ltd

Andrew Clarke is the Head of BGS (Brink’s Global Services) for Singapore, Indonesia, Malaysia and Brunei. He has held various leadership positions throughout his career in secure logistics and risk management with Brink’s, which started in Hong Kong in 2010. Andrew relocated to Singapore in 2018 to expand the precious metals line of business along with Brink’s portfolio of services and industries.

SBMA Committee-Photo-Kazuya-Naoki

Mr Kazuya Naoki

Head of Metals, Asia
ICBC Standard Bank Plc, Singapore Branch

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.

SBMA Committee-Photo-Vinh-Nguyen

Mr Vinh Nguyen

Head of Precious Metals, Asia
StoneX APAC Pte Ltd

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

SBMA Committee-KL-Yap

Mr KL Yap

General Manager, Singapore Refining Business Unit
Metalor Technologies (Singapore) Pte Ltd
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.