CME Teams Up With Royal Mint To Trade Gold Using Blockchain
Zacks Investment Research | Nov 30, 2016 05:34AM ET
With continued focus on expansion and innovation of product offerings, CME Group Inc. (NASDAQ:CME) teamed up with the UK’s Royal Mint to offer a new way of trading physical gold using the blockchain technology.
In a joint press release issued on Tuesday, the Royal Mint stated that the partnership is set to build and launch a digitized gold product – Royal Mint Gold (RMG) – to be available in 2017.
A Strategic Partnership
The Royal Mint – a 1,000-year-old institution engaged in making coins and medals for an average of 60 countries every year – will issue RMG as a “digital record of ownership” for gold stored at its secured bullion vault.
CME Group will be responsible for developing, implementing and running RMG’s digital trading platform. This trading platform will operate 24 hours a day and 365 days a year.
The usual model for investing in gold involves management fees as well as storage charges. In contrast, RMGs will provide gold ownership with the choice for converting it to physical gold by The Royal Mint without any storage cost. Precisely, the new offering promises a cost-effective, easier and cryptographically safe option to buy, hold and trade spot gold.
Initially, the HM Treasury-owned mint will issue RMG as much as $1 billion worth of gold through investment providers. Further issuance of RMG will be subject to market demand.
Julie Winkler, Senior Managing Director, Research, Product Development and Index Services at CME Group mentioned, “Developing a digital gold trading platform will help ensure that CME Group’s current product offerings meet the evolving needs of the global marketplace. As we continue to expand our global footprint and develop new products, this platform will help set standards for digital assets in financial markets.”
CFO of The Royal Mint, Vin Wijeratne stated, “The Royal Mint has a unique history and a trusted reputation earned over many centuries trading in gold but until now, there hasn’t been a way to digitally trade physical gold.” Wijeratne added, “This landmark partnership allows us to combine the world’s leading mint, the best futures trading platform globally and best in class technology.”
Blockchain Buzz
Blockchain, the “digital ledger” or the underlying technology behind Bitcoin, has gained popularity for its significant potential to revamp the extensive and complex network of bank payments and other financial settlements. Blockchain is a type of distributed ledger that maintains digitally recorded data with a decentralized network, removing the need of a third party. While Bitcoin was one of the first cryptographic currencies that drew attention in 2009, several other cryptographic currencies are now available.
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CME Group’s shares have gained 24.4% year to date, outpacing 15.5% growth of the Zacks categorized Securities Exchanges industry.
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