ICBC Becomes a Clearing Bank within London Precious Metal Clearing System
On May 11, 2016 (BST), ICBC Standard Bank PLC, a subsidiary controlled by ICBC, was officially approved to join the precious metal clearing system of London Precious Metals Clearing Limited (LPMCL), becoming the first banking group admitted since 2005. ICBC becomes the first Chinese-funded commercial bank eligible for providing London precious metal clearing service for global customers. This greatly strengthens China’s status and voice in the international precious metal market. Before this, ICBC had obtained the market maker membership of London Bullion Market Association (LBMA) and price fixer qualification of London Platinum and Palladium Market (LPPM), and officially became the gold price fixer of LBMA.
According to an insider, the world’s over-the-counter gold and silver agreements are mostly cleared in London. The status of London in the gold market is equivalent to that of New York in USD. Founded in 2001, LPMCL has established the most important precious metal clearing system in the global gold market. Before ICBC Standard Bank PLC joins this system as a clearing bank, all members are large-scale multi-national banks from Europe and the U.S., including Barclays Bank, HSBC, JPMorgan Chase & Co Bank, Scotiabank, and Union Bank of Switzerland. Institutions clear their transactions conducted in the London precious metal market through opening precious metal accounts in these banks. As a member, ICBC Standard Bank PLC can not only provide clearing service to meet customers’ transaction demands, but also provide personalized services (such as physical precious metal supply and inspection) for customers through precious metal warehouses. It is also gifted a chance to play an important role in precious metal product lease and financing intermediation.
Since launching specialized precious metal business in 2009, ICBC, as China’s largest precious metal trade bank, has gradually built a comprehensive precious metal business system covering domestic and overseas, exchange and over-the-counter trading, physicals and futures markets. By the end of March 2016, ICBC’s accumulative precious metal transactions reached 730,000 tons with a value of over RMB 7 trillion. Transaction volume for Shanghai Gold Exchange ranked No. 1 among banking institutions. In addition, ICBC has built a globalized precious metal and bulk commodity investment management platform by leveraging the Group’s internationalized and integrated platform advantages, steadily pushing forward its business in the international core financial market. In December 2011, ICBC became China’s first commercial bank that joined the LBMA as an omnipotent member in the name of the Head Office. In February 2015, ICBC upgraded and consolidated its global trade by purchasing 60% equities of Standard Bank PLC, providing global customers with financial trading services including precious metal commodities and foreign exchange. On April 11, 2016, ICBC was officially approved to join the gold price mechanism of LBMA and became its gold price fixer. With enhancing service capability in the precious metal sector and market influence, ICBC has further improved its global product and service system, and will be able to provide better integrated financial services and create greater value for global customers.