EDITOR'S NOTE: Don't Miss a Beat! Sign-up for the Kitco News Weekly Roundup– our newsletter highlighting our most popular features, articles and videos! Register Here

LBMA Receives Eight Proposals For New Gold-Fixing Mechanism

By Kitco News
Friday October 17, 2014 12:03 PM

(Editor’s note: Updating earlier story with more details starting with 10th paragraph)

(Kitco News) -Eight proposals from 10 companies have been submitted by companies interested in developing and administering a new gold-fixing mechanism, the London Bullion Association reported Friday.

Some of the submittals were joint proposals from more than one company.

Meanwhile, a survey of market participants showed a desire for an electronic, auction- based system, the LBMA said.

On Sept. 4, London Gold Market Fixing Limited and LBMA asked for proposals from third parties to administer the London gold fixing, as well the simultaneous launch of a survey to gather further feedback from market participants. A new silver fixing began in August.

The LBMA said a shortlist of firms submitting proposals include Autilla Ltd. (Sapient), CME Group (Thomson Reuters), Intercontinental Exchange, London Metal Exchange and EBS.

The next step will be a “market seminar” to provide an opportunity for market participants to consider presentations from these companies, the LBMA said. Executive summaries of the proposed solutions will be circulated publically by the LBMA following the seminar.

The LBMA said it hopes a market consensus will emerge in November, after consultations with the market and discussions with regulators. The “chosen solution provider” will then develop a system, expected to be implemented by end of 2014 or early 2015.

The LBMA said it will make no further press announcements in advance of executive summaries following the seminar.

“Only with market engagement can a solution work in practice and we are keen that as many market participants (as possible) are involved in the process,” said Ruth Crowell, LBMA chief executive. “We are also specifically looking to identify those participants who are willing to take part in the launch of the new mechanism.”

Meanwhile, the LBMA said there were 130 responses to the “gold price consultation survey,” which ended on Oct. 10.

“The general consensus was that the gold pricing mechanism should be an electronic, auction-based solution,” the LBMA said in a news release. “Additionally, market participants suggested some enhancements which include a display of real volumes and an increase in the number of direct participants with representation from non-banks.”

In the survey, the LBMA asked participants how useful the current gold price mechanism is in their current business models. The average score was 8 on a scale up to 10, the LBMA said.

Related Stories:

Sixty-nine percent of the respondents said they use the gold price mechanism daily. Twenty-five percent said periodically, 2% never and the remaining 4% said not applicable.

Eighty-three percent of the respondents said that at least a portion of their trading was carried out on the gold fixing.

When asked if the gold price discovery method is sufficient, 76% said yes and 24% said no.

When asked if they would consider acting as a contributor, 31% said yes, 42% no and 27% maybe.

By Allen Sykora of Kitco News; asykora@kitco.com



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
kitco news

Precious Metal Charts

Click to see this Precious Metal chart
  1. 24h
  2. 30D
  3. 60D
  4. 6M
  5. 1Y

Interactive Chart