Wednesday, October 19, 2011

LPMCL - London Precious Metals Clearing Limited


"...LOCO LONDON is the indisputable international standard for gold and silver dealing and settlement.

Most global ‘over-the-counter’ gold and silver trading is cleared through the London clearing system, managed by the London Precious Metal Clearing Limited (LPMCL), which operates a central electronic metal clearing hub, with deals between parties throughout the world settled and cleared in London. The fact that many Government Institutions and Central Banks entrust their gold to the Bank of England, and in some instances with the London bullion clearing commercial banks, underlines the confidence that exists in London as the key marketplace for bullion.

The most widely traded market for bullion dealing globally is for delivery of metal in London. Consequently, the volume of loco London metal settlements between counterparties requires an effective and efficient daily clearing system of paper transfers, which avoids the security risks and costs inherent in the physical movement of metal. LPMCL which is operated by six market making members of The London Bullion Market Association, provides an electronic matching system to effect the daily settlements in gold and silver.

Each member of LPMCL is a signatory to a code of practice on clearing under which members undertake to operate unallocated gold and silver accounts between themselves. These are utilised for the settlement of both mutual trades and on behalf of the clients of the London Bullion Market...."


"Could a clearing house replace the London bullion clearing system?

Yes, but it would prove to be less efficient and more expensive than the current arrangement. It would also most likely need strong financial backing and insurance cover – which then directs us back to the London bullion clearing banks, as above, all of whom are first tier global institutions."


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