No Transparency With LBMA’s New Trade Volume Data

LBMA’s new trade volume data will do nothing for the transparency of the London Gold Market

At its annual conference this week in Boston, the London Bullion Market Association (LBMA) announced that commencing 20 November, it will begin publishing data showing the size of trading activity in the London gold and silver markets, a move which it claims will make the London precious markets more transparent. This trade data initiative of the LBMA is an initiative that has been promised for over 4 years now, but which sadly but predictably now appears to be a lost opportunity to provide real transparency to that market.

For the LBMA has now confirmed that the new data will only cover “LBMA’s membership share of the loco London and Zurich OTC market and will reflect 5 day aggregate of trades.” Unbelievably, the LBMA will not even begin publishing a daily rolled up trade volume number for the first 3 months of the data releases, until early 2019.

There is nothing transparent about this initiative. A rolled up aggregate number of trading volumes in any market is by definition opaque not very useful. The LBMA reporting will provide no granularity of trades by trade type, transaction type, client profile (eg ETF trades, central bank trades, miner trades, refiner trades), no breakdown of physical gold trades vs paper gold trades, and no information on the secretive central bank gold trades, gold loans and gold swaps.

Given that the London precious metals market trade data is now being collected in an LBMA database, all of the above granular trade data could be published. The fact that the LBMA will not publish any of this data speaks volumes about its true intention which is to continually stifle the availability of any real data about the London gold and silver markets.

Availability of trade data is crucial to the efficiency of any financial market and to the proper functioning of price discovery in that market. Bond markets and equity markets are in general efficient because of the full availability of granular trading data. Without granular trade data for the London gold and silver markets, these markets will remain completely untransparent and open to the continued abuse by the very bullion banks of the LBMA (and their central bank supporters) which thrive on market secrecy while paying lip-service to the notion of increasing transparency.