International Gold Options Exchange (IGO)
Introduction
The International Gold Options Exchange (IGO) was a futures and options exchange located in London, England. It was established in 1982 as a platform for trading gold options. In 2003, the IGO merged with the London Metal Exchange (LME) and became part of the LME Clear group.
Products Traded
The IGO primarily traded gold options contracts. These contracts allowed traders to speculate on the future price of gold by buying or selling the right to buy or sell a specified amount of gold at a predetermined price on a specified date.
Market Participants
The IGO attracted a wide range of market participants, including:
* Gold producers and consumers: These companies used the IGO to hedge their exposure to gold price fluctuations.
* Investment banks: They acted as market makers and provided liquidity to the exchange.
* Hedge funds and institutional investors: They used the IGO to speculate on gold prices and manage risk.
* Individual traders: They participated in the IGO market on a smaller scale.
Trading Mechanism
The IGO operated an electronic trading platform where traders could enter and execute orders anonymously. The exchange used a central limit order book system, which matched buy and sell orders based on price and time priority.
Clearing and Settlement
Clearing and settlement of IGO contracts were handled by LME Clear, the central clearing house for the LME group. LME Clear guaranteed the performance of contracts and ensured the orderly and efficient settlement of trades.
Regulation
The IGO was regulated by the Financial Conduct Authority (FCA) of the United Kingdom. The FCA oversaw the exchange’s operations and ensured compliance with regulatory requirements.
Merger with LME
In 2003, the IGO merged with the LME, another major futures and options exchange. This merger created a single platform for trading gold and other metals. The IGO’s gold options contracts continued to be traded on the LME after the merger.
Legacy
The IGO played a significant role in the development of the global gold market. It provided a liquid and accessible platform for trading gold options, allowing market participants to hedge risks and speculate on gold prices. The IGO’s legacy continues through the LME, which remains a leading exchange for gold trading today.
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