FOCUS – At least 12 firms set to compete for gold fix

Oct 10, 2014 - 4:24 PM GMT

At least 12 candidates have thrown their hat into the ring to administrate the London gold fix, a spokesman for the London Bullion Market Association (LBMA) told FastMarkets.

The LBMA also expects a couple more entries before the deadline at the close of business today, he added.

A non-disclosure agreement (NDA) signed by all parties submitting bids for the fix prevents their identities from being revealed at this stage, sources suggested.

Still, the Chicago Mercantile Exchange and partner Thomson Reuters released a statement of intent of adding to the silver fix, the administration of which they were awarded back in July.

“Following our appointment to provide the new electronic, transaction based auction LBMA Silver Price mechanism since August 2014, Thomson Reuters and CME Group will be collaborating again to develop a compelling proposition for the new gold reference price,” they said.

“Together we can deliver a robust, reliable and efficient pricing mechanism to meet the needs of everyone in the gold community – including its miners, its consumers, and the rest of the wide array of market stakeholders,” they added. “We look forward to consulting widely with them to design a system that will provide the authoritative reference price.”

But the London Metal Exchange, alongside partner Autilla, has declined to comment, as has Platts, which was also tipped as a contender.

The manner in which the LBMA will make its decision on the gold fix is completely different from how the silver fix played out.

“We have a luxury in more time,” the LBMA spokesman said. “With silver we had to have a rigid timeline because we had a finite deadline to work to.”

This time, the process is much more of a quality-driven timeline because the administration would like to ensure that the best possible outcome is achieved, he stressed. A decision may not be made before the end of the year.

In September, the London Gold Market Fixing Ltd (LGMFL) opened up its Request for Proposal (RFP) process to third-party providers that might be interested in assuming responsibility for the administration of the London Gold Fixing.

It was envisaged that a third-party administrator for the Gold Fix would be announced later this month with its implementation completed by the end of 2014, according to LGMFL, which is working with the LBMA.

This is an open RFP process, meaning that it is not restricted to just those companies that provided proposals for the Silver Price Fix.

The twice-daily gold fix, which has been in operation since September 12, 1919, has come under increased regulatory and media scrutiny. While there have not been any findings of wrongdoing, a third-party operator is seen as a critical step in modernising the image of the benchmark process, while also providing enhanced transparency and compliance with legislation.

(Editing by Mark Shaw)