FASTMARKETS UPDATE – The new London Silver Price

Aug 12, 2014 - 5:41 PM GMT

As you may have read on, the 117-year-old London Silver Fix ceases on August 14. From this Friday, the fix will be replaced by a new London Silver Price (LSP). The LSP is being administered on behalf of the LBMA by Thomson Reuters and the CME, although the terms of the agreement state that the LSP should be equally available live from any participating vendor

Since the announcement of this change was made in July, FastMarkets has been actively seeking clarification from both Thomson Reuters and CME about how the LSP will work. Unfortunately, despite our best efforts, there is still much that we do not know. With two days to go, it is far from clear that we – or other vendors – will be able to source the LSP and distribute it to our subscribers and data feed customers.

What we do know is that the LSP will be discovered through an electronic auction process. There will be no chairman; instead, the system algorithm will move the auction price up and down until buy and sell orders are matched to within a reasonable tolerance of 300,000 ounces.

There will be a wider number of participants than the old fix, although we do not who they will be.

In addition to the actual LSP price, it will theoretically be possible to follow the live auction process, observing net supply and demand at the various trial prices. Access to the LSP will initially be free but after an introductory period of six months a fee must be paid.

There are many questions then that still need answering, not least what the auction data will look like and what it will cost to follow the LSP process live or observe the price live. FastMarkets will continue to do everything possible to secure this important silver benchmark for our customers.