- Write by:
-
Saturday, July 10, 2021 - 13:30:32
-
634 Visit
-
Print
Mining News Pro - A British regulator said on Friday that banks clearing gold trades in London could apply for an exemption from tighter capital rules due in January 2022, removing what some said was a threat to the functioning of the market.
London is the world’s biggest physical precious metals trading hub. Its clearing system, operated by a handful of large banks with access to metal in vaults, settles gold transactions worth around $30 billion a day.
The upcoming rules, known as the net stable funding ratio (NSFR), are part of Basel III regulation designed to make banks more stable and prevent a repeat of the financial crisis of 2008-09.
They treat physically traded gold like any other commodity, requiring banks to hold more cash to match their gold exposure as a buffer against adverse price moves.
The London Bullion Market Association (LBMA), an industry body, has lobbied against them, saying they are unnecessary and could force some banks – including clearing banks – to stop trading.
Following a consultation, the Bank of England’s Prudential Regulatory Authority (PRA) said on Friday it had “decided to amend its approach to precious metal holdings related to deposit-taking and clearing activities.”
It said it had introduced an “interdependent precious metals permission” which would reduce the size of the required capital buffer.
“This is one of the key points that what we’ve been asking for all these years,” said Sakhila Mirza, the LBMA’s chief counsel. “Clearing will be exempt.”
The PRA said it would not classify gold as a high-quality liquid asset, which would have freed other trades such as precious metals loans and leases from the high capital requirement.
The LBMA says gold is liquid enough not to need an additional liquidity buffer for clearing and settlement and short-term transactions.
The London clearing banks are JPMorgan, HSBC , ICBC Standard and UBS. JPMorgan declined to comment, and the others did not immediately respond late on Friday.
Short Link:
https://www.miningnews.ir/En/News/614931
South African diversified miner Sibanye Stillwater is discussing with lenders to temporarily lift limits on borrowings, ...
Africa-focused Montage Gold announced Thursday it has received a ministerial order granting all environmental approvals ...
Newmont Corp. has no plans to expedite a decision on its $2.5 billion Yanacocha Sulfides project, dashing the Peruvian ...
China’s central bank added 60,000 troy ounces of gold to its reserves in April, official data showed on Tuesday, ...
Gold rose after mixed signals from the US, where optimism is growing the economy is on target for a soft landing as the ...
Executives from Saudi Arabian mining company Manara Minerals are in Islamabad to continue talks about buying a stake in ...
Harmony Gold said on Thursday an employee working on planned rail maintenance had died at its Mponeng mine in South ...
Emerging North American gold producer Contango ORE is boosting its landhold in Alaska with the acquisition of Canada’s ...
Gold fell, with market watchers saying the previous day’s rally in response to Federal Reserve Chair Jerome Powell’s ...
No comments have been posted yet ...