What is LBMA?

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What is LBMA?

LBMA refers to the London Bullion Market Association, an organization involved in the wholesale trading of gold and silver bullions. The transactions involved in the LBMA include over-the-counter trading of gold and silver between member banks, traders and refiners from different parts of the world. Since many of the members of this association are major banks or central banks from different countries, its incorporation came about with advise and loose monitoring from the Bank of England.

Incorporated back in 1987, the LBMA represents the largest OTC transactions involving gold and silver bullions. Other major trading centers are located in New York – USA, Tokyo – Japan, and Zurich – Switzerland. The LBMA’s Good Delivery list is also widely considered as the de facto standard in terms of the gold and silver bar quality.

Member banks, traders and refiners come from 20 different countries. Today, the LBMA has about 120 companies and organizations as members or associates. Required of these companies are activities related to the trading and/or market of gold and silver bullions. Most of the member companies are engaged in trading activities, brokerage, shipping, mining, storage, refining, inspection, and even research. Members of the association will get direct information from the LBMA when it comes to trading rates, volatilities, and valuation data.

Aside from OTC transactions, gold is also traded in the form of securities. This type of gold trading is more common in other countries like the US and Australia. But in the UK, the city of London has the biggest share of wholesale OTC trading of gold and silver. Using a 2008 statistical data, average daily volume of gold that is cleared via the LBMA reached 18.3 million ounces. For silver, it reached 107.6 million ounces. Combining the average daily volumes for both and silver would result to a total value of 15 billion US dollars.

 

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