‘Three more banks’ to join ICE’s gold price benchmark

Apr 15, 2015 - 4:12 PM GMT
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Three more banks are waiting in the wings to join ICE’s gold price benchmark, a well-informed source claimed, without disclosing their identities.

The banks will join JP Morgan Chase Bank, Scotiabank, HSBC, Société Générale, UBS, Barclays and Goldman Sachs in the LBMA Gold Price, which formally replaced the near-century-old London Gold Fix on March 20, bringing the number of participants to 10 once all the necessary formalities have been completed, the source said.

The twice-daily gold fix, which had been in operation since September 12, 1919, came under increased regulatory and media scrutiny. A third-party operator was seen as a critical step in modernising the image of the benchmark process, while also providing enhanced transparency and compliance with legislation.

London-based ICE subsidiary ICE Benchmark Administration (IBA), which was established in April 2013 to administer benchmarks, now provides the price platform, methodology and overall administration and governance for the LBMA gold price.

Many had been expecting some Chinese banks to be taking part in the new system when it launched, although some of the newer participants were reportedly struggling to meet both internal sign-offs and the paperwork required to join in time for the first auction.

Industrial and Commercial Bank of China (ICBC), one of the biggest banks in the world and a major participant in the gold market, is widely believed to be one of those interested.

An ICE spokesman told FastMarkets that there are no new participants to announce at this time.

Simultaneously, ICE has launched a consultation on the LBMA gold price on three aspects of the process – determining the benchmark price in the event that the minimum number of participants are not present, a review of the long-standing convention to add a ‘seller’s premium’ to the price and the usage of gold prices published in currencies other than dollars.

The market consultation will close on May 1 and the Gold Price Oversight Committee will consider the responses. IBA will publish the results and feedback of the market consultation in due course, ICE said on its website.

 

(Editing by Mark Shaw)

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