Wholesale market participants currently trade OTC outside of the electronic environment either via phone, email, or in person. These systems are completely manual, problematic, inefficient and costly, while transparency under this market model has been roiled by scandals that have spurred an ever growing mistrust toward the existing spot physical precious metals market.
There is an acceptance in the market that the legacy OTC London market architecture is outdated and there is a need for a transition to a centrally cleared exchange. This would present a game-changing solution not only for the precious metal industry itself, but also for key participants like wealth managers and online brokers, who could, via the exchange, expand their product offering and add new revenue streams to their business in a transparent and efficient way.
Precious Metal Industry: An Archaic & Inefficient Market
Unlike in the energy or base commodity space, precious metal mining producers (suppliers) had no pre-existing way to enter the wholesale market directly. ABX provides this facility to enable suppliers to act as Liquidity Providers and access our exchange directly and sell metal at the “Offer” price.
Prior to ABX there were challenging barriers to entry for end consumers (Jewellers, Manufactures & Investors) to directly access the wholesale market. The physical trade flow of bullion typically passes through a series of intermediaries. ABX integrates the physical trade cycle, allowing for end consumers to access the exchange directly.
Industry Problems | ABX Solutions
Previously Siloed and Disconnected. Now interconnected and fungible.
Local physical markets currently trade in a very siloed manner, completely independent and disconnected from one another. ABX interfaces these markets and aggregates global physical liquidity.
International Liquidity and Market Expansion Override Limited Resources
Many organisations do not have the resources to conduct the necessary due-diligence, understand the regulatory framework and establish global operations. ABX allows local market participants to expand their horizons internationally. This enables them to benefit from international liquidity and attract international clients.
Breaking Down Barriers to Entry
There are significant barriers to entry into the physical market in each location. Outside of the big bullion banks or international trading houses, local market participants are only trading in their home region and only facing local clients. As a result there has been no pre-existing global aggregator platform and substantial price differentials exist in the different liquidity centres around the world.
ABX breaks down the barriers to entry to each physical market and directly interfaces these trading centres, allowing traders to arbitrage the differential.
Wealth Management and Online Broking Industry
ABX allows wealth managers and online brokers to expand their horizons globally to benefit from access to international liquidity centers, attract international business and service the international trading requirements of their existing clients.
Industry Problems | ABX Solutions
Lack of an efficient physical precious metal investment offering
ABX provides a real-time online trading platform that can be white-labelled and utilised by wealth managers and online brokerage firms around the world.
Asset Managers and brokers can either act on behalf of their clients and/or disseminate the platform to their clients so they are able to trade on their own account 23 hours per day anywhere in the world.
The MetalDesk platform is a holistic plug & play solution appropriate for the financial services industry.
Unable to use physical bullion as good collateral, despite it being a tier 1 asset
The ABX electronic Vault Warrant (eVW) system provides for the first time the ability for physical precious metals to be utilised by investors and Prime Brokers.
eVWs are easily created and pledged within the MetalDesk platform to be utilised as margin collateral or for financing purposes.
This allows online brokers and asset managers to utilize the wealth held by their clients in physical bullion as margin collateral for their other trading services.