The way the daily London gold fix – an industry reference price – is set is under scrutiny, with industry experts meeting at the offices of the World Gold Council to discuss its reform or replacement.
According to the World Gold Council, the meeting, which has started at their offices near St Pauls in London, will take the form of a round-table debate on the reform of the London Gold Fix and the modernisation of the London gold market.
“Many aspects of the existing price benchmark process are viewed favourably by market participants,” the WGC said. “However, other elements are in need of reform if IOSCO compliance is to be achieved.”
This follows a similar consultation into the silver fix chaired by the London Bullion Market Association – sources told The Bullion Desk that the LBMA has given its backing to a joint bid by CME and ThomsonReuters but added that this remains subject to regulatory approval.
But while many believe the outcome of the silver fix talks will be a blueprint for what happens in the gold market, other sources have said that this is far from a foregone conclusion.
“The World Gold Council is seeking views from both users and service providers on the optimal characteristics of any reformed system,” the WGC said.
“We will also debate whether IOSCO compliance is enough or should the industry seek to modernise more than just the price benchmark,” it added.
HSBC, Barclays, Société Générale and Scotia-Mocatta set the twice-daily gold fix, which has been in operation since September 12, 1919. Germany’s Deutsche Bank withdrew from the process earlier this year after failing to sell its seat.
In 2004, NM Rothschild and Sons sold its seat to Barclays for a rumoured $1 million.
In May this year, the FCA fined Barclays 26,033,500 pounds for failings surrounding the fix. The bank failed to manage conflicts of interest between itself and its customers when a trader exploited the weaknesses in Barclays’ systems and controls to seek to influence a PM fixing in June 2012.
(Editing by Mark Shaw)