With the rise of the one true physical gold market coming out of Shanghai, China in the past year, the London Bullion gold market has been seen to be both antiquated, and no longer of significant relevance as it primarily trades in paper contracts and rarely delivers physical gold. And with their paper based trading and gold derivatives making the institution little more than a mechanism to protect fiat currencies by beating down the fair market trading of gold, the both the LBMA and other European gold markets are now looking to modernize through the potential of blockchain technologies.
The London Bullion Market Association has started negotiations with two financial technology firms to create a trading platform for precious metals, according to two people with direct knowledge of the matter.
The partnership between Autilla Ltd. and Boat Services Ltd. was selected for further talks, according to the people, who asked not to be identified because the discussions are private.
“It would be premature to comment at this stage as no legal agreements have been signed with any provider,” Ruth Crowell, chief executive officer of the LBMA, said in an e-mail to Bloomberg News.
The LBMA, which represents London’s gold market, is seeking to modernize the world’s largest gold-trading hub, an over-the-counter system that clears more than $5 trillion a year. Regulators are pushing for more transparency and tighter controls. In other cities, such as New York, transactions take place on an exchange.
The LBMA’s platform would mean deals between two parties can be posted and stored in a database, and eventually lead to the publication of a forward price curve.
Companies including the London Metal Exchange, Intercontinental Exchange Inc. and CME Group Inc. submitted proposals for the platform, people familiar with the matter said in February.- Bloomberg
Euroclear, the world’s largest Belgium-based asset and securities settlement cooperative founded by J.P Morgan & Co., attended the SIBOS Annual Conference in Geneva, Switzerland with Paxos to announce their joint project and explain the importance of a secure and efficient infrastructure in unsystematic gold markets.
The Paxos-Euroclear gold market-focused Blockchain settlement solution will be the first of its kind and most likely the only Blockchain settlement platform to be integrated by a major market like the London Bullion Market.
Paxos CEO Charles Cascarilla believes that a robust and secure Blockchain-based infrastructure will enable the London Bullion Market as well as other leading gold exchanges to autonomously process trades and increase the efficiency of the post-trade process. - Cointelegraph