CME to launch London Spot Gold, Silver Futures in January 2017

UNITED STATES November 02 2016 12:22 PM

LONDON (Scrap Register): CME Group has announced it will offer a new Precious Metals Spot Spread to enable customers to effectively manage spot-futures spread price risk. 

The Spot Spread will be facilitated by the introduction of London Spot Gold futures and London Spot Silver futures contracts, and will provide traders with transparent, real-time information on the price relationship between COMEX futures and London spot markets. These two new contracts will be listed on COMEX and will begin trading on Monday, January 9, 2017, pending regulatory review.

“The introduction of the Spot Spread will enable customers to efficiently and electronically manage the risk they have between our deeply liquid COMEX Gold and Silver futures and the London spot markets,” said Miguel Vias, CME Group Head of Precious Metals. 

“Our new contracts will provide traders with streamlined access to the London spot market via the safety and transparency of cleared, exchange-traded futures contracts. We believe the Spot Spread has the potential to create an even stronger link between the world's two largest pools of precious metals liquidity, namely benchmark COMEX Gold and Silver futures and the London spot markets.” Vias added. 

This new inter-commodity spread trade market will be established on CME Globex between the London Spot Gold and Silver futures contracts and the active month of the COMEX Gold and Silver futures. The Precious Metals Spot Spread will enable participants to transfer risk in one simple, cost-effective transaction executed electronically on CME Globex and cleared by CME Clearing.

The new contracts behind the Spot Spread will expand CME Group's suite of COMEX precious metals contracts, including the global benchmark Gold and Silver futures contracts, and provide customers with exposure to the London spot market by creating two-day futures contracts that will result in delivery of unallocated London gold or silver. 

Both London Spot Gold futures and London Spot Silver futures will be physically settled and listed for normal trading on CME Globex and for submission of block trades and exchange for related positions (EFRP) via CME ClearPort. 

London Spot Gold futures contract will represent 100 troy ounces of unallocated gold, and each London Spot Silver futures contract will be equivalent to 5,000 troy ounces of unallocated silver.