Tags: London | gold | fixing | Reuters

London Gold Fixing Seen Getting New Administrator by Year-End

Tuesday, 29 Jul 2014 10:01 AM

The banks that conduct the century-old gold fixing and the London Bullion Market Association will seek proposals next month for a new administrator to run a revamped process for the benchmark by year-end.

The London Gold Market Fixing Ltd., which manages the procedure, and the LBMA will open a market consultation in late August and plan to announce a third-party administrator by the end of September, the association said in a statement today. The process will be open and not restricted to firms who pitched to run a mechanism that will replace the silver fixing on Aug. 15.

The gold fixing company said July 16 that the LBMA will help with a request-for-proposals exercise and that it’s seeking an independent chairman for the price-setting ritual that takes place twice a day by phone. A similar process for silver will be replaced by an electronic, auction-based mechanism run by CME Group Inc. and Thomson Reuters Corp. next month after Deutsche Bank AG’s planned withdrawal would leave just two banks to conduct fixings for that commodity.

“The bullion market needs, initially, to concentrate on the London silver price implementation which is in its final stages of testing,” Ruth Crowell, chief executive of the LBMA, said in the statement. “We look forward to focusing on gold from late August.”

Deutsche Bank’s exit from the gold process this year as it scales back its commodities business left Societe Generale SA, Bank of Nova Scotia, HSBC Holdings Plc and Barclays Plc to conduct gold fixings that are used by miners and central banks to trade and value metal.

Fixing Process

During fixings, member banks declare how much metal they want to buy or sell for clients as well as their own accounts. Traders relay shifts in supply and demand to clients and take fresh orders as the spot price changes, before the fix is made. Participants can trade the metal and its derivatives on the over-the-counter market and exchanges during the calls. The process dates to 1919 for gold and 1897 for silver.

Precious metals are getting more attention from regulators after price-rigging in everything from interbank lending rates to currencies led to fines and overhauled financial benchmarks. The gold fixing company and the LBMA will continue discussions with the U.K.’s Financial Conduct Authority and market participants, according to today’s statement.

The LBMA said on July 11 that CME Group and Thomson Reuters will run a replacement for the silver fixing benchmark, which takes place each day at noon. The London Metal Exchange, Autilla Ltd., Bloomberg LP, Intercontinental Exchange Inc., ETF Securities Ltd. and Platts had also proposed alternatives.

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The banks that conduct the century-old gold fixing and the London Bullion Market Association will seek proposals next month for a new administrator to run a revamped process for the benchmark by year-end.
London, gold, fixing, Reuters
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2014-01-29
Tuesday, 29 Jul 2014 10:01 AM
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