Tuesday, May 9, 2017

China to challenge both the LBMA and Comex through the creation of a new gold and silver futures trading platform

The London Metals Exchange, which is a Hong Kong owned subsidiary out of London, is ready to take on the Western futures markets by introducing their own gold and silver trading platform starting on July 10.

This new program by the LME will function on the London markets and provide a fully functional futures trading market in which investors can settle for both cash, or physical gold and silver delivery.

London Metal Exchange, a subsidiary of Hong Kong Exchanges and Clearing, will launch gold and silver spot and futures trading in London on July 10 in a bid to capture the increasing demand for trading of precious metals in London, the exchange said on Monday. 
The LME gold and silver product will launch at a time when HKEX is planning to introduce gold futures in the third quarter of this year should it secure approval from the Securities and Futures Commission. The trading in the two markets however, would remain separate, and there will be no cross trading. 
“The HKEX and the LME gold products would be traded in different markets and different time zone,” said Kate Eded, LME head of precious metals who was speaking at a workshop in Hong Kong on Monday. 
The gold and silver contracts to be launched at the LME would be traded in US dollar which will include spot trading and trading of future contracts with a maturity of up to five years. Investors could choose cash or physical settlement. Five banks including Morgan Stanley and Goldman Sachs would help quote prices to maintain liquidity of the markets. - South China Morning Post
Unlike the LBMA, and especially with the U.S. based Comex, these markets are primarily used for derivative paper trading and rarely perform any actual metal deliveries.  And with the LME being tied to both Hong Kong and London, the potential for China to eventually usurp control over the global price for gold and silver from the LBMA and the Comex moves another step closer as true metals investors will find it more favorable to migrate to an exchange that deals with physical deliveries of actual metals.

0 comments:

Post a Comment