subject: The History Of The London Bullion Market [print this page] The London Bullion Market Association, usually known as LBMA, came into being back in 1987 to serve the interests of the manifold members in the wholesale bullion market. The LBMA is recognized as the London-based trade alliance that represents the wholesale OTC that means Over the Counter market for gold and silver with its base in London.
The oldest and the original member of the LBMA is, Mocatta & Goldsmid, who laid down the basis of London Bullion Market in 1684. Later in 1897, London Silver Fixing was introduced followed by London Gold Fixing in 1919, which defined the structure of the present London Bullion Market.
The London Bullion market is an over the counter trade, within the market and with other clients for the purpose of trading gold and silver. The trading is carried out amongst a number of members from the (LMBA) London Bullion Market Association. This whole activity is monitored to some extent by the Bank of England. The traders and the bankers usually include major international banks and dealers, gold producers, refiners, fabricators and traders.
London is regarded as the largest global market for over the counter transactions of gold and silver, as opposed to the exchange market. Gold is traded in the form of securities on the London Bullion Market. The trading activity has expanded to international centres like London, New York, Johannesburg and Australian stock exchanges.
London is perceived to be the largest global centre to operate OTC transactions by New York, Zurich and Tokyo. Gold is also traded in the moulded form of securities, such as exchange traded funds that are known as ETFs. These are traded on global exchange like London, New York, Johannesburg and Australian stock exchanges.
These clients were invited to open bullion accounts in various individual London Trading Houses. These accounts acquired the term LOCO LONDON accounts, which were initially used to settle transactions between the clients and the dealers. Later, as more individuals, companies and banks became attracted to bullion trading, the loco London account holders could also handle transactions from third parties, who wished to transfer bullion in London. Today all such third party transactions are handled by the London Bullion Clearing System.
However, the London bullion market is quite diverse when compared to the London Metal Exchange that is abbreviated for LME. LME deals with the future exchanges in the world's largest market. It trades with other metals as well on the basis of contracts.
