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Bringing Operational Efficiency to the Precious Metals Market

By Anoushka Rayner, Head of Growth, Commodities at Paxos, Paxos Trust Company

Published on September 10, 2021

As financial institutions and their clients continue to focus on capital efficiency and cost savings, whether driven by regulation or an internal-cost cutting strategy, post-trade costs are at the heart of the discussion. Other asset classes have used innovative ways to cut costs and precious metals must not be left behind.

Currently, settlement is a fragmented process that often lacks automated controls. Cash is settled via a traditional correspondent banking network whilst metal is settled via metal clearing banks. Operations are managed by unconnected processes across different banking networks and infrastructure. This causes multiple pain points and risks, including reconciliation between different banking systems and teams and settlement risk due to the lack of control in the movement of assets versus cash. The current system exposes participants to additional risk and increased cost.

DEVELOPING THE RIGHT SOLUTIONS

Having standardised post-trade confirmations and settlement affirmations for its clients, Paxos is now focusing on settlement. Participants using the Paxos Settlement Service can safely settle LBMA good delivery precious metals against cash through one system. By layering its technology over a traditional cash account and an LPMCL metal clearing account, Paxos has delivered a simultaneous settlement solution. Ownership of assets/cash changes only when both parties have funded their accounts, allowing settlements to be fulfilled simultaneously, removing inherent risks. Clients can leave cash and metal in their own Paxos accounts to settle further obligations, or it can be withdrawn automatically. Paxos envisions this solution being used in other regions.

To improve efficiency, Paxos is also working with leading market participants to allow for daily net funding of all precious metal settlements. Paxos Settlement Service will then facilitate bilateral simultaneous settlements before returning any net receipts back to participants. This additional feature will give clients even more flexibility with their settlement choices. This can reduce settlement risk, as funds are not released until all parties have funded their settlement obligations in their accounts.

Paxos believes digitisation is the way forward. Taking operational efficiency a step further, consider the impact of digitisation on settling cross-border precious metals transactions. Today metal is a cumbersome asset to settle; by digitising the asset you mobilise it, reduce costs and even allow for same day settlement. Paxos has demonstrated how this works with PAX Gold, a Paxos-issued digital gold token that is 100% backed by LBMA Good Delivery bars and regularly audited. Paxos is able to support peer-to-peer settlement of precious metal without needing to impose cut-offs, allowing the market to settle 24 hours a day and removing time zone issues, whilst eliminating logistical inefficiencies and high costs associated with moving physical gold. Now, replicate that regionally and consider how open the precious metals market can become for cross-border trading. Digitisation allows for gold to be used more effectively as an asset.

The solutions Paxos has introduced help reduce barriers to entry for new market participants. This is crucial as precious metals is a notoriously difficult market to enter due to the operational requirements like metals clearing accounts. By working with Paxos, more participants can enter the market, bringing a diverse liquidity pool and healthier market overall.

ABOUT PAXOS

Paxos Trust Company operates a regulated blockchain infrastructure platform. It builds enterprise blockchain solutions for institutions like PayPal, Interactive Brokers, Bank of America, Credit Suisse, Societe Generale and Revolut. The company has raised more than $540 million raised from leading investors including Oak HC/FT, Declaration Partners, Mithril Capital and PayPal Ventures. The company has offices in New York, London and Singapore.

ANOUSHKA RAYNER has 25 years experience in the financial markets. She has worked in the foreign exchange market for HSBC, UBS, as well as leading electronic broking houses and NEX Optimisation, a group focused on post-trade solutions. Her role at Paxos is to bring efficiency to Commodities settlement and to mobilise the asset class through digitisation.

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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
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.

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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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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.

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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

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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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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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Mr KL Yap

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