Intercontinental Exchange (NYSE:ICE) has announced the introduction of central clearing for the IBA Gold Auction which underlies the LBMA Gold Price that is planned to go live in March 2017, and the launch of a new London gold daily futures contract in February 2017, subject to regulatory review. The contract will be for Loco London gold (which refers to gold bullion that is physically held in London).
“We are pleased to introduce central clearing for the gold auction underlying the benchmark LBMA Gold Price,” said Finbarr Hutcheson, President, ICE Benchmark Administration. “The number of participants in the LBMA Gold Price has grown from 4 to 13 since we launched last year and we continue to see strong demand from other firms, which we believe the introduction of central clearing will further support. This growth demonstrates the continued importance of the LBMA Gold Price and its international role as the world’s most trusted benchmark price for gold.”
Ruth Crowell, Chief Executive of the LBMA commented, “I am delighted to see that this important innovation is coming to LBMA Gold Price auction. Central clearing is something that we have hoped to see ever since we started transitioning the benchmarks in 2014. Central clearing during the auction will allow the number of diverse direct participants to continue to grow.”
Central clearing will be enabled by a new physically settled, Loco London gold daily futures contract that will trade on ICE Futures US (IFUS). It is designed to complement the existing London market, being based on the LBMA Good Delivery Rules.
The ICE Gold Daily Future will be a physically settled, daily contract, traded in one cent ($0.01) increments, that calls for delivery of one hundred fine troy ounces of unallocated Loco London gold of quality satisfying the LBMA Good Delivery Rules.