OREANDA-NEWS. March 18, 2016. Throughout its long history, physical gold trading has taken place primarily in over-the-counter (OTC) markets, which trades over 90% of the world’s physical gold worth US\\$5 trillion every year.

However, in the wake of the Libor scandal, more stringent regulations are being put in place to bring greater transparency to the market. Consequently, several banks and trading houses have exited the bullion business while many others are contemplating or have scaled back operations – becoming increasingly selective of their counterparties. 

The SGX Gold Contract presents a new opportunity for all bullion participants to trade with a larger pool of counterparties without having to face increasingly onerous regulations. In contrast to the bilateral OTC market, the SGX Gold Contract is a centrally-cleared marketplace – improving market transparency and reducing systemic risk through an established futures framework: