Gold trading markets and exchanges
Trade in gold around the globe consists of over-the-counter (OTC) transactions, bids on shares in exchange-traded funds (ETFs), and purchases of gold futures and options. The main centres for OTC transactions are London, New York and Zurich – with most trades clearing through London. Without a formal structure or open-outcry meeting place, the London Bullion Market Association (LBMA) acts as the principal point of contact for OTC transactions. The gold market is dominated by large institutional players and high-net-worth individuals who conduct business with bullion banks via telephone or computer dealing systems. In contrast gold futures and options contracts are traded on regulated commodity exchanges around the world.
List of exchanges by country
The most significant gold futures exchanges are the COMEX – now part of the NYMEX’s metals division and part of CME Group, and the Tokyo Commodity Exchange (TOCOM), which has been trading gold futures since 1982. Like the COMEX and TOCOM, many futures exchanges operate through a central clearing system, allowing the exchange to act as the counterparty in the trade. Trading futures and options contracts on exchanges is also based on fixed delivery dates and transaction sizes. Although trading costs are generally higher than OTC transactions, they are negotiable. As a matter of practice, only a small percentage of futures market turnover ever comes to physical delivery of the gold represented by the contracts traded.
● London: LBMA
● Turkey: Istanbul Gold Exchange
● UAE: Dubai Multi Commodities Centre
● USA: CME Group
● Japan: Tokyo Commodity Exchange
● China: Shanghai Gold Exchange; The Chinese Gold & Silver Exchange Society
● Dubai: Dubai Gold & Commodities Exchange
● India: Multi Commodity Exchange of India; National Commodity and Derivatives Exchange
● Brazil: BM&F Bovespa
● Taiwan: Taiwan Futures Exchange
● Indonesia: Jakarta Futures Exchange
● Turkey: Turkish Derivatives Exchange
● Russia: RTS Exchange
The global gold markets are overseen and regulated by both governmental and self-regulating organisations aimed at establishing rules designed to prevent market manipulation, abusive trade practices and fraud. In addition certain trade associations have established rules and protocols for market practices and participants. In the United Kingdom, responsibility for regulation of all market participants falls under the Financial Services Authority (FSA), as designated by the Financial Services and Markets Act 2000 (FSM Act).
In the United States, the OTC market for gold is overseen by the Commodity Futures Trading Commission (CFTC), an independent agency created by Congress with the mandate to regulate commodity futures and option markets. The CFTC also requires that any trader holding an open position of more than 20,000 ounces in any one contract month on the COMEX declare his or her identity, nature of their business and the details of his or her positions.
The Japanese equivalent is the Ministry of Economy, Trade and Industry – the regulatory authority that oversees TOCOM operations.