Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON
  1. Homepage
  2. Equities
  3. South Africa
  4. Johannesburg Stock Exchange
  5. Standard Bank Group Limited
  6. News
  7. Summary
    SBK   ZAE000109815

STANDARD BANK GROUP LIMITED

(SBK)
  Report
SummaryChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

Standard Bank : Exclusive-Banks prepare to scrap LME gold and silver contracts, sources say

10/13/2021 | 09:29am EDT
FILE PHOTO: Traders work on the floor of the London Metal Exchange

LONDON (Reuters) - A group of banks that partnered with the London Metal Exchange (LME) to launch gold and silver futures in 2017 is preparing to abandon the project after hoped-for volumes did not materialise, three sources with direct knowledge of the matter said.

Such a move would end an attempt by the LME, which dominates industrial metals trading, to capture part of London's bullion market, which is the world's largest with gold worth some $17 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 (OTC) deals between banks and brokers to exchanges, which regulators see as safer and more transparent.

But the biggest dealers, which include JPMorgan and HSBC, shunned the contracts, and after Societe Generale, one of the LME's partners, closed most of its commodities business in 2019, trading dwindled to nothing.

Three sources at banks partnered with the LME said they would meet in coming months. Two said if nothing had changed they would pull out. The third said it was clear the contracts had not been successful and the LME deal was up in the air.

"There's not been anyone who is keen on keeping it," one of the sources said, adding that his bank was paying "a couple of hundred grand a year" to maintain the contracts and had millions of dollars locked up in a default fund for them.

The deal with its partners had an initial term of five years, LME chief executive Matt Chamberlain told Reuters. "It's very possible they choose not to continue after 2022," he said.

Others that partnered the LME are ICBC Standard, Natixis, proprietary trader OSTC and the World Gold Council (WGC), an industry body.

"The World Gold Council strongly believes in increasing transparency and investor accessibility to gold. This is why we support LME precious and will continue to collaborate across the industry on similar initiatives," Mike Oswin, WGC's global head of market structure and innovation, said in a statement.

All of the banks involved declined to comment. OSTC did not respond to a request for comment.

CRITICAL MASS

Although the contracts had a positive start, with 14.3 million ounces of gold worth around $20 billion and 121 million ounces of silver worth about $2 billion trading on the LME in September 2017, activity then began to fall.

In 2019 and 2020, a bullion price rally pushed trading in London and on New York's Comex exchange to record levels, with about a billion ounces of gold changing hands in each venue in March 2020. The LME's contracts have not traded since mid-2020.

Last year, the LME's partners wrote the value of the project down from $2.5 million to zero, the accounts of a company set up by the partners show.

"There wasn't enough critical mass from banks who wanted the market to go on exchange and go cleared compared to perhaps some other banks who wanted it to stay OTC," said Chamberlain.

Despite the failure of the contracts, sources involved in them and at banks that did not use them said trading in London was likely to eventually go on exchange because that is what regulators want.

"In a few years, someone will try this again," one said.

(Reporting by Peter Hobson and Pratima Desai; Editing by Veronica Brown and Alexander Smith)

By Peter Hobson and Pratima Desai


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
SOCIÉTÉ GÉNÉRALE -1.59% 28.15 Real-time Quote.68.11%
STANDARD BANK GROUP LIMITED 1.13% 139.17 End-of-day quote.9.51%
All news about STANDARD BANK GROUP LIMITED
10/20STANBIC UGANDA : Bank Facilitates U.S.$ 21.6 Million Sprucing Up of Beitbridge Border Post
AQ
10/20STANDARD BANK : CCA - SBSA Main features regulatory capital instruments - October 2021  (6..
PU
10/20STANDARD BANK : CCA - SBG Main features regulatory capital instruments - October 2021  (10..
PU
10/19STANBIC UGANDA : Bank Unveils Special Financial Package for Government Health Workers
AQ
10/15Rising Demand Just One Factor in Inflation, Supply Chain Woes
DJ
10/15Stanbic Bank Donates to Children's Home
AQ
10/15S.Africa's banks say they can't cut off funding for coal just yet
RE
10/14COCA COLA : to Tap Banks for African Unit's $8 Billion IPO
MT
10/14Coca-Cola Reportedly Wants $8 Billion Valuation in African Bottling Unit IPO
MT
10/13STANDARD BANK : Exclusive-Banks prepare to scrap LME gold and silver contracts, sources sa..
RE
More news
Analyst Recommendations on STANDARD BANK GROUP LIMITED
More recommendations
Financials
Sales 2021 111 B 7 723 M 7 723 M
Net income 2021 22 795 M 1 582 M 1 582 M
Net Debt 2021 - - -
P/E ratio 2021 9,74x
Yield 2021 5,41%
Capitalization 221 B 15 301 M 15 345 M
Capi. / Sales 2021 1,99x
Capi. / Sales 2022 1,84x
Nbr of Employees 50 115
Free-Float 93,7%
Chart STANDARD BANK GROUP LIMITED
Duration : Period :
Standard Bank Group Limited Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends STANDARD BANK GROUP LIMITED
Short TermMid-TermLong Term
TrendsBearishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 10
Last Close Price 139,17 ZAR
Average target price 158,30 ZAR
Spread / Average Target 13,7%
EPS Revisions
Managers and Directors
Simpiwe Kenneth Tshabalala Chief Executive Officer & Executive Director
Arno Daehnke Group Financial Director & Executive Director
Thulani Sikhulu Gcabashe Chairman
Alpheus Mangale Chief Engineering Officer
Tau Mashigo Chief Technology Officer