The Global Precious Metals Code Version 2, published in December 2022, sets out the standards and best practices expected from market participants in the global over-the-counter (OTC) wholesale precious metals market. It is a crucial framework that promotes integrity and transparency in the market, aiming to define a robust, fair, effective, and transparent market where participants can transact following best practice guidelines. The Code covers various principles, including ethics, governance, compliance and risk management, information sharing, and business conduct. Adherence to the code is essential for all market participants, and all LBMA members have attested their conformance with the Code by signing a Statement of Commitment.
Key Requirements of the Global Precious Metals Code Version 2:
1. Ethics: Market participants are expected to act professionally and ethically to maintain the integrity of the global precious metals market. They must deal with all stakeholders in a fair manner and implement appropriate internal policies to identify and address conflicts of interest.
2. Governance: The Code emphasizes the importance of effective governance practices within market participants' organizations. This includes clear organizational structures, responsibilities, and decision-making processes to ensure accountability and transparency.
3. Compliance and Risk Management: Market participants are required to have robust compliance and risk management frameworks in place to identify, assess, and mitigate risks effectively. This includes compliance with relevant laws, regulations, and market standards.
4. Information Sharing: The Code encourages appropriate and timely sharing of information among market participants to promote market integrity and efficiency. However, information sharing should be done in compliance with applicable laws and regulations.
5. Business Conduct: Market participants are expected to conduct their business with honesty, fairness, and integrity. This includes fair dealing, avoiding conflicts of interest, and maintaining confidentiality as appropriate.
In addition to these key requirements, the Code is accompanied by an Explanatory Note that provides guidance on how the Code may be used and implemented. To assist members and market participants in adherence to the Code, the LBMA has developed a training module in partnership with ACI Financial Markets Association (ACI), which provides continuous training and certification for the Global Precious Metals Code and good market practices in the OTC precious metals markets.
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