LME to scrap gold and silver futures by July due to thin activity

LONDON (April 23): The London Metal Exchange (LME) plans to scrap its precious metals futures due to low levels of trading activity, it said on Friday (April 22).

Last October, sources told Reuters that banks that partnered with the LME to launch gold and silver futures in 2017 were preparing to abandon the project after hoped-for volumes did not materialise.

The exchange, the world’s oldest and largest market for industrial metals, said in a statement on Friday it expected to complete the withdrawal of gold and silver contracts by July.

The exchange said it took the decision after discussions with market participants and “in light of the low levels of trading activity”.

The move ends an attempt by the LME to capture part of London’s bullion market, which is the world’s largest with gold worth some US$17 trillion (about RM73.52 trillion) changing hands last year.

The LME launched the contracts with partners including Goldman Sachs and Morgan Stanley, who agreed to promote trade in them in return for 50% of revenues generated.

The project partners had hoped tightening regulation would push bullion trading in London away from over-the-counter deals between banks and brokers to exchanges, which regulators see as safer and more transparent.

The LME is owned by Hong Kong Exchanges and Clearing Ltd.

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