What Does It Mean To Be An LBMA Member?
What is the LBMA?
The London Bullion Market Association, or LBMA, is the independent authority on the global over-the-counter (OTC) precious metals market. Its mission is to “advance standards for the common good of the industry.” In practice, this mission is threefold: To guarantee metal quality in the Loco London Market (where the bullion traded is physically held in London), establish a global precious metals code, and ensure the ethical sourcing of metal.
The LBMA provides different levels of membership, which have specific requirements and ensures the upkeep of these standards.
Sharps Pixley is proud to be a Full Member of the LBMA. LBMA membership incorporates approximately 150 companies in 24 countries – not every bullion dealer you come across is an LBMA member.
Full Members are reviewed periodically in line with LBMA’s Due Diligence Policy. This process is designed to audit continued engagement with the London Bullion Market and ensure that due diligence standards are maintained.
Understanding the LBMA
History and Establishment
The gold rush in 1697 saw vast quantities of gold travel from Brazil to London, by the East India Company, which had a Royal Charter for Queen Elizabeth I. Leading to a need for the safe storage of the gold. Subsequently, the Bank of England set up a vault to house the metal, which supplied the European market.
In 1750, the Bank established the London Good Delivery List to recognise those refineries that produced gold bars to a specific standard and which would be allowed to circulate in the London market. The Good Delivery List still exists today and is as essential as it was then.
In 1850, five companies: N M Rothschild & Sons, Mocatta & Goldsmid, Pixley & Abell, Samuel Montagu & Co. and Sharps Wilkins established the ‘London Gold Market’ and set up the first gold price fix at Rothschild’s offices.
It wasn’t until 1987 that the Bank of England decided that an independent body was needed to take over the governance of the Good Delivery List. Leading to the London Bullion Market Association being founded, which also merged the administration of the London Gold Market and London Silver Market.
Role and Functions
The LBMA’s role is multifaceted, but, it is principally the voice of the precious metals market – acting as a point of contact for regulators, clients, investors and members alike.
The LBMA ensures quality assurance across the market, including specifying refining standards, trading documentation and good trading practices.
As previously mentioned, the LBMA is responsible for the maintenance of the Good Delivery List (see more below) and the Precious Metals Code – a code of best practice applicable to all LBMA members.
In recent years, the LBMA has also become the intellectual property holder of precious metal spot price benchmarks, meaning the internationally accepted live benchmarks for gold, silver, platinum and palladium upon which trading and pricing decisions are made. Perhaps most importantly, the LBMA serves to build trust, integrity and standardisation across the market.
Criteria for LBMA Membership
Membership Categories
The LBMA offers three categories of membership:
Affiliate Membership
Affiliate membership bears limited scope to attest to new applicants and are generally not as active in the Loco London Market as full members. Affiliate members have some LBMA voting rights and opportunity to sit on sub-committees, but these are not as extensive as full members.
Market Making Member
This type of membership brings the responsibility to quote bid and offer prices to each other during the London business day. This membership is only open to banks.
Full Membership
The highest level of membership that can be obtained. It requires members to be active within the Loco London market, trading with at least three other members for one year or more.
During the application process for full membership, three companies must ‘attest’ for the applicant and supply a letter of recommendation. Additionally, full members are invited to put forward candidates for election in three areas of the LBMA board and have a say in driving strategy and essential market solutions for the future.
Sharps Pixley is proud to be a full member of the LBMA.
Benefits of LBMA Membership
Full membership to the LBMA brings a host of benefits to both the member and those interacting with that member.
- Reputation and Trust: To become an LBMA member, other approved members will have vouched for the new applicant as a reputable and trustworthy company. Once approved, full members are required to uphold fair and transparent business dealings and a high degree of ethics. Dealers with full LBMA membership are ambassadors of quality products. At Sharps Pixley, we only deal with metal refined by those on the LBMA’s Good Delivery List (more below.)
- Market Access: LBMA members have access to a vast network of other industry experts, allowing for greater knowledge sharing. This includes staying up to date on the latest market data and industry insights, thus allowing members to assist their clients better.
- Regulatory Compliance: LBMA members must uphold various regulatory standards, including the ethical sourcing of metals and promoting sustainability. Full Members are also granted to trade under the Terminal Markets Order (TMO). Within the UK, silver and non-investment gold remain under the scope of the TMO under an agreement reached between HM Revenue & Customs and the LBMA. This legislation is a simplification mechanism which applies a ‘zero rate’ of VAT to sales of goods ordinarily dealt with on the market. This enables sales between Members and between a Member and a non-member to be treated as zero-rated, provided the Member retains effective physical control of the metal, or they ship it outside the UK on behalf of the non-member.
What Is The LBMA Good Delivery List?
Since 1987, the LBMA owns and maintains the Good Delivery List for gold and silver. It was set up to acknowledge the refineries which produced gold bars of a certain standard and therefore allowed to enter the London market.
To be accepted, bars must meet defined specifications for fine-ounce weight, purity level and physical appearance. The refiners who make the list must also meet checks made on their history in the market, financial standing, ability to produce bars which meet the required standard, and minimum levels of production.
The Good Delivery List is the only globally accepted accreditation for the bullion market and, therefore, essential in maintaining its integrity.
What Does It Mean to Be Part of the LBMA for Sharps Pixley Customers?
Assurance of Quality
As a full member of the LBMA, Sharps Pixley only deals with bars made by refiners on the Good Delivery List and coins produced by world-renowned mints. We are an ambassador for quality bullion products, meaning clients can be sure they will only receive authentic, fairly priced products of the highest calibre.
Enhanced Customer Confidence
In becoming a member of the LBMA, we have demonstrated a commitment to the precious metals market, its reputation and its future. Customers can trust that we will carry out their transactions with the highest levels of integrity.
Transparency and Security
Both transactions related to physical bullion products and vaulting services for gold and silver can be done safely in the knowledge that dealings will be conducted fairly and transparently. Sharps Pixley is transparent in its pricing structure of bullion products and offers some of the most competitive vaulting fees in the market.
Being a full member of the LBMA is more than just a logo on our website; it provides assurance that your risk is minimised when buying gold and silver. We are always happy to talk through any queries or concerns you may have and remain at your disposal.
Choose Sharps Pixley – An Accredited LBMA Full Member
Sharps Pixley was founded on traditional values of service, discretion, integrity, and respect which align with the values we wish to uphold as a full member of the LBMA.
With a rich history dating back to 1796, we are a trusted supplier of gold and silver bullion, and work with a global client base for investment, safety deposit box storage, vaulting and gold pensions.
To learn more about our products and services, speak to an expert on +44(0) 207 871 0532 or send us an email at [email protected].