By Francesca Freeman
LONDON--ETF Securities and Platts on Thursday added their names
to the list of companies interested in overseeing the new London
silver fix.
The exchange-traded funds pioneer and the commodities
information provider said they have joined the London Metal
Exchange and CME Group Inc. in registering their interest in
providing a replacement for the benchmarking process, which will be
set for the final time in August.
ETF Securities has been in talks with the London Bullion Market
Association about hosting a silver benchmark for several weeks,
said founder and chairman, Graham Tuckwell.
"I've put a proposal forward. It's just a matter of refining the
detail to get it in an optimal form for LBMA members," Mr. Tuckwell
said.
The LBMA, a trade association, is undertaking a market
consultation to find a replacement for the fix, which sets a price
used by mining companies to settle sales contracts, to price such
derivatives as exchange-traded funds and affects global jewelry
prices.
ETF Securities' proposal is based on the company's silver fund,
which trades on the London Stock Exchange and is physically-settled
through the LBMA's clearing system.
"The banks that are involved in the metal markets would put
their bids and offers into the option," said Mr. Tuckwell. "It's
open, it's transparent, every bid and offer that goes into the
option can be audited and supervised."
Commodities information provider Platts said it is also
interested in hosting the silver fix.
"We have held conversations with the LBMA and we look forward to
continued collaborative engagement regarding price discovery in the
silver market," a spokeswoman for the McGraw Hill Financial
Inc.-owned company said.
Financial information provider Thomson Reuters Corp. has also
expressed an interest, according to a person familiar with the
matter. The London Metal Exchange and CME Group, two major
commodities exchanges, have already said they are both separately
talking with market participants and the LBMA about providing a new
silver fix.
A spokesman for the LBMA said the body is yet to reach a
decision on which proposal to back, and it "assessing the feedback
and considering those who may be interested in assisting us" in
launching a new benchmark.
The silver 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 when
Deutsche Bank declared its intention to leave the process as part
of a wider reduction of its commodities business, the fix
administrator announced the end of the benchmark.
The silver fix and the gold fix, which is set by four banks and
has been around since 1919, have recently have come under the
scrutiny of regulators as part of a broader examination of
financial benchmarks in the wake of a global scandal involving the
rigging of interest rates. Last month, Barclays was fined GBP26
million ($43.5 million) by the U.K.'s Financial Conduct Authority
for lax controls after one of its traders manipulated the gold fix
at the expense of a client.
Thomson Reuters and Platts compete with News Corp.'s Dow Jones
& Co., publisher of The Wall Street Journal and Dow Jones
Newswires, on business news.
Write to Francesca Freeman at francesca.freeman@wsj.com
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