CME Group Inc. Thursday confirmed its interest in filling the
void left by the demise of the London silver fix.
"While the London market is looking at a new way to set the
daily spot price of silver, we are working closely with the
precious metals industry and the London Bullion Market Association
to reduce market disruption by helping to find a robust
transaction-based way to set the daily spot price so the markets
can continue to work efficiently and seamlessly," said Harriet
Hunnable, managing director of metals at CME Group.
The Wall Street Journal had previously reported that CME Group
is in the early stages of discussion about establishing its own
silver fix, which helps determine the value of some derivative
contracts and affects the earnings of mining companies that sell
raw material to metals refiners.
London Silver Market Fixing Ltd., which administers the process,
announced the end of the benchmark earlier in May. It said it would
now be left to "market participants" to come up with an
alternative. The London Bullion Market Association is currently
leading a market consultation into possible alternatives.
The fix has gone through various iterations in its 117-year
history. Most recently, it has been set daily at noon by way of a
conference call involving representatives from Deutsche Bank AG,
HSBC Holdings PLC and Bank of Nova Scotia. But the benchmark was
considered unviable, according to people familiar with the matter,
after Deutsche Bank recently declared its intention to leave the
process as part of a wider scaling back of its commodities
business.
The silver fix and its counterpart the gold fix--which is set by
four banks and has been around since 1919--have recently come under
the spotlight from regulators as part of a broader examination of
financial benchmarks in the wake of a global interest-rate-rigging
scandal.
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