H.R. 8007 — SILVER Act

This section states congressional findings that the geographic concentration of precious metals storage near New York City creates systemic risks, reduces liquidity, and increases costs to market participants; that recent global metals market events underscore the need to minimize regulatory barriers to supply; and that adding high-security storage vaults in lower-cost markets near transportation hubs would enhance liquidity, confidence, competition, and investor access while promoting transparent selection processes for such facilities.

This section amends core principles for derivatives clearing organizations (DCOs) under the Commodity Exchange Act (CEA) to address oversight of depositories for precious metals (i.e., gold, silver, platinum, and palladium) used in futures contracts. Specifically, it (1) requires DCOs to consider risks from geographic concentration of such depositories; (2) directs DCOs to develop and publish objective, transparent criteria for evaluating and selecting precious metals depositories—including factors such as geographic diversity, competition, risk management, storage costs, and systemic risk—and to approve new depositories to promote public interests in diversity, liquidity, resiliency, access, competition, and efficiency while maintaining security standards, with a requirement to select at least two depositories in each U.S. time zone (Eastern, Central, Mountain, and Pacific); (3) requires periodic assessments of market participants' access to physical settlement of commodities nationwide to ensure system availability and resiliency; (4) requires DCO rulebooks to specify conditions for precious metals depositories to apply for and receive approval as metal service providers; and (5) requires DCOs to conduct periodic trade practice analyses that include approval processes for such metal service providers. (As background, CEA core principles govern DCO operations to mitigate systemic risk in futures markets; these changes aim to reduce concentration risk in precious metals storage and enhance market resiliency.)