The group that clears all transactions in London's gold market is easing the criteria for new members to join, Reuters reported, citing sources at member banks.
London Precious Metals Clearing Ltd., is owned by five banks — HSBC Holdings PLC, JPMorgan Chase & Co., Bank of Nova Scotia, UBS Group AG and ICBC Standard Bank Plc. This number has dwindled from seven.
LPMCL's members are connected through a network of bilateral trading and credit agreements that allow parties to settle trades electronically. This is unlike a traditional clearing house, which acts as intermediary that backs trade guarantees and settles them.
Sources at the banks told Reuters that, because of a lack of clear requirements for new member banks, existing members had been able to veto applications, which has invited criticism. The group has been restructured, with a new list of requirements for applicants and a category for non-shareholding members who would pay a subscription.
"One of the benefits of the new structure has been to make the LPMCL more accessible to new members and to clarify the entry requirements," London Bullion Market Association CEO Ruth Crowell said in an email to the newswire.
"They had to do it because they are scared they'll find themselves on the end of an anti-trust collusion lawsuit," according to a source in the bullion market familiar with the restructuring.
