PRECIOUS METALS

London banks get exemption from gold clearing rules

Banks in London will not be subject to tighter capital rules when clearing gold trades, Reuters reported at the weekend.

Staff reporter
London banks get exemption from gold clearing rules

New international banking regulations known as Basel 3 are designed to make banks more stable and prevent a repeat of the Global Financial Crisis.

They are due to come into force in 2022.

The rules include a requirement for banks to hold more cash to match their gold exposure.

The London Bullion Market Association has argued against them, saying gold is liquid enough not to need an additional buffer and that it could force some banks to stop trading.

The Bank of England's Prudential Regulatory Authority said on Friday it had "decided to amend its approach to precious metal holdings related to deposit-taking and clearing activities", meaning the required capital buffer will be reduced. Reuters said.

The news agency quoted UBS as saying it "welcomes the PRA's decision, which supports stability in bullion clearing and avoids disruption to the London market".

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