Physical Participants
The siloed wholesale spot trading & clearing infrastructure based in London does not cater for the interconnected global market that physical industry participants operate in. The physical precious metal markets across the world are archaic, inefficient and in need of significant reform to become modernised, globalised and integrated.
The ABX offers precious metal producers, refiners, consumers, traders and dealers a marketplace where they are able to source, deliver or store physical precious metal in 7 global locations, acting as liquidity providers or takers to manage and capitalise on regional supply and demand trends.
A 23 hour a day 5 days a week market, real-time price discovery, price transparency, institutional liquidity and a point-click-trade electronic process provide an attractive alternative to the existing methods of physical bullion trading.
| Traders | Producers | End-Users | Hubs |
| Bullion Dealers | Miners | Jewelers | Central Banks |
| Wholesale Traders | Refiners | Industrial Manufacturers | Exchanges |
Traders
Being extremely cost effective and easily accessible, the ABX can be used as an inventory management tool for bullion dealers: an avenue to source bullion to replace diminished inventory and an avenue to sell excess inventory.
Outside of the large global bullion banks or international trading houses, local market participants are challenged to trade beyond the boundaries of their home region. ABX breaks down the barriers to entry to each physical market and presents opportunities to act as liquidity providers or takers to manage and capitalise on regional supply and demand trends.
Participants can offer trade 23 hours per day and attract not just local clients, but clients anywhere in the world who wish to trade in any of the 7 regional Trading Hubs offered in the platform, leading to additional volume and greater distribution. This added efficiency boosts market participants’ income by decreasing operating costs and increasing the volume of business.
Producers
Precious Metal producers are provided direct access to the wholesale market where they can sell metal at the “Offer” price. Currently, mining producers must sell to an intermediary and hit their “Bid”, which decreases their revenues materially. In addition, the price transparency strips away all the historical dealer/intermediary imbedded fees, profit margin add-ons and discounted premiums forced upon by current players.
Producers strive to achieve incremental savings on the expense side of mining operations; however, at the bullion sales level, there are very few alternatives available to increase revenues. By utilising the facilities of ABX, significant additional revenues can be achieved.
Enhanced spot pricing (being a price maker rather than price taker; no one front running orders).
Premiums realised through sales of higher value products at the refiner level (matching output with demand – kilo bars vs. large bars).
Logistics savings (imbedded location, transportation dealer profit margins are reduced).
More favourable payment terms (ABX payments on sales are t+0 to t+2 depending upon product).
Alternative sources of financing (use of eVWs/inventory as collateral may be at more favourable rates than existing revolving or debt financing facilities).
Refiners are increasingly integrating operations up and down the supply chain cycle. Utilising ABX, refiners can enhance brand recognition as well as significantly increase their distribution network, seamlessly, across the 7 ABX global trading hubs.
End-Users
End-users of the physical participant chain are able to access the wholesale market directly, giving them greater control of economics, access without geographical barriers and the advantage of avoiding inflated premiums.