Five banks discuss ways to change gold trading methods in London

London

FOR more than three centuries, gold has traded in London on a virtual handshake. Now, five banks are thinking about changing that.

While bullion trading happens with a set contract on an exchange in most places, London is the exception because the market functions entirely over-the-counter with banks making custom deals on price, delivery times and size. Now, a group of lenders, including Goldman Sachs Group Inc and Morgan Stanley, are assessing whether it makes sense to introduce standardised central clearing and listed derivatives, according to a letter obtained by Bloomberg to the London Bullion Market Association (LBMA).