The London Bullion Market Association (LBMA) has launched the second version of its Global Precious Metal Code, which sets out the minimum standards and best practice expected from market participants in the precious metals market.

This year, the Global Precious Metal Code Working Group reviewed the first version of the code and compared changes made in the updated versions of the Money Market and FX Codes.

As such, they considered matters such as remote working, diversity and inclusion; physical settlement risks; environmental, social and governance factors; relevant financial standard and markets board standards; and responsible sourcing guidelines.

In addition, the working group endeavoured, through two public consultations, to balance language and terminologies used, in the hopes that the new additions will further strengthen the standards and expectations of the physical precious metal market.

LBMA chairperson Paul Fisher says that in addition to market conventions, the code covers the principles that should be adopted by precious metals market participants, including ethics, compliance, governance and risk management, as well as pre-trade execution and post-trade business conduct.

“Such codes are important contributors to developing and establishing the trust on which markets depend. This trust is critical to the maintenance of an effective, fair and transparent market where high standards of behaviour are the norm,” he says.

Going forward, the LBMA will seek recognition from the Financial Conduct Authority in line with their recognition programme.

All LBMA and London Platinum and Palladium Market members will be required to attest to the second version of the code by the end of 2023. The LBMA also welcomes non-members to attest where possible.

Fisher notes that the code is intended to be a reference point for standards for all precious metals market participants, not just LBMA members.

“The code has been endorsed by the LBMA board, which includes market participants elected to form a representative cross-section of the LBMA membership, as well as three independent nonexecutive directors,” he explains.

The LBMA’s Precious Metals Code Working Group, with expertise in the regulatory aspects of the precious metals market, assisted with the preparation and revision of the code and will continue to help to ensure that it remains fit for purpose, adds Fisher.

To assist firms in fulfilling their obligation to ensure all staff involved in their precious metals activity are trained in line with the guidelines of the code, the LBMA has partnered with the ACI Financial Market Association to provide a training solution for this requirement.