More transparency for London's gold market

The gold market in London is striving for more transparency and has two small start-ups Enabled  Boat Services and Autilla are the two companies that have been commissioned to build a new trading platform. This will give regulators more insight into the gold transactions in this market, where $5 trillion worth of gold is traded on an annual basis.

To this day, a large proportion of transactions in London are carried out directly between traders, the so-called over the counter  These transactions therefore remain invisible to the market, much to the dismay of regulators. Nor could London lag behind New York and Shanghai, competitive gold markets where transparency is greater.

$5 trillion gold market

Gold is one of the most popular commodities to trade. In August, according to the London Bullion Market Association (LBMA), 18.8 million troy ounces of gold were traded daily, worth about $25 billion.

The two companies that will build the system to record all transactions in London's gold market have fewer than 30 employees. All members of the LBMA will be required to use this system. If they don't, they will lose their membership and associated tax benefits.

More transparency 

According to Adrien Biondi, head of the precious metals department at Commerzbank in Luxembourg, a gold trading platform has several advantages over over the counter Transactions. "Trading through an exchange has several advantages, including lower counterparty risk and better regulatory alignment," Biondi told Bloomberg.

Next year, the World Gold Council and the LME will launch a new gold contract, which will make central clearing easier in gold trading.

London represents nearly half of the world's gold trade, according to the CPM Group. New York is in second place with more than 40%, while the gold trade in Shanghai has a market share of about 5%.

London's gold market becomes more transparent