Tags: gold | benchmark | banks | metal

Gold Industry Seen to Support Changes to Century-Old Benchmark

Monday, 07 Jul 2014 01:49 PM

The gold industry supports calls for changes to the century-old gold fixing benchmark that’s used by mining companies to central banks to trade and value the metal.

The World Gold Council said there was “strong support” for its key principles to reform the benchmark, which is set daily by four banks. Thirty-four delegates including producers, refiners, central banks and exchanges met today in London to discuss ways to improve the rate, the group said in an e-mailed statement.

“We are at the start of a process that will lead to a reformed and modernized gold benchmark which attracts a broader range of market participants,” Natalie Dempster, managing director of the group’s central banks and public policy unit, said in the statement.

Regulators around the world are grappling with a widening list of benchmarks that have been, or are claimed to have been, manipulated by traders at banks for profit. The U.K. Financial Conduct Authority fined Barclays Plc 26 million pounds ($44.6 million) in May after a trader sought to influence the gold fix in 2012. While there’s “no clear evidence” of manipulation during the London gold fixing it’s possible it occurred, David Bailey, director of financial markets infrastructure and supervision at the FCA, said at a U.K. Treasury Select Committee hearing July 2.

The fixing takes place at 10:30 a.m. and 3 p.m. in London by phone with Societe Generale SA, Bank of Nova Scotia, HSBC Holdings Plc and Barclays Plc. representing themselves and clients.

The reformed gold fix should be based on executed trades, have “highly transparent input data,” calculated from “a deep and liquid market,” and represent a physically-deliverable price, the World Gold Council said.

There should be a single benchmark, discovery process continuity and a local London price to reflect the liquidity available in the primary trading center for gold, according to the council. It should also reflect a full range of market participants and meet the International Organization of Securities Commissions’ principles, it said.

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The gold industry supports calls for changes to the century-old gold fixing benchmark that's used by mining companies to central banks to trade and value the metal.
gold, benchmark, banks, metal
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2014-49-07
Monday, 07 Jul 2014 01:49 PM
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