LONDON (Reuters) - Electronic trading house XTX Markets will participate as a non-clearing member in the London Metal Exchange’s new precious metals contracts when they launch on Monday, the LME said on Thursday.
The LME has developed the LMEprecious contracts with the World Gold Council, proprietary trader OSTC, and five banks, with which it has 50:50 revenue-sharing agreement that commits them to provide liquidity from day one.
London’s gold trade is dominated by over-the-counter (OTC) business conducted bilaterally among networks of brokers, banks and traders.
The LME is introducing its new contracts to try to capitalize on increasing regulatory scrutiny that is raising costs for banks trading gold over the counter. Regulators want a more transparent, centrally-cleared model that exchanges offer.
The LME earlier said four more financial firms - Bank of China International, Commerzbank, Marex Financial and Macquarie Bank - would take part in the contracts.
Of these, only Marex was ready to participate, as a general clearing member, as of Thursday, the LME said. A general clearing member can clear trades on behalf of clients.
Reporting by Peter Hobson. Editing by Jane Merriman