Several Chinese banks eyeing gold, silver fixes – LBMA spokesman

Oct 14, 2014 - 1:27 PM GMT
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Several Chinese banks are set to join the London Bullion Market Association’s (LBMA) gold and silver pricing benchmarks, with a spokesman indicating that they are simply waiting for the administration to be decided.

A handful of Chinese banks indicated to LBMA chief executive Ruth Crowell during a recent visit to China that they would like to take part in the daily silver pricing benchmarks, the spokesman said

The interested parties are, however, waiting to discover who will be awarded the administration of the gold pricing benchmark before also taking part in the twice-daily gold pricing sessions, he added.

JP Morgan joined the silver benchmarking process yesterday, alongside HSBC Bank USA, Mitsui & Co Precious Metals, the Bank of Nova Scotia – ScotiaMocatta and UBS AG. Others parties are believed to be in the pipeline.

At least 12 candidates have thrown their hat into the ring to administrate the London gold pricing benchmarks, which closed its doors for submissions last week.

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 was an open RFP process, meaning that it was not restricted to 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.

The LBMA is set to announce details of the timetable for the new gold benchmark administration process on Friday.

(Editing by Mark Shaw)