Ten different groups are vying to replace the historic London
silver fix, according to the London Bullion Market Association.
The LBMA said Friday it will whittle these down in the coming
days to a shortlist that will be invited to a meeting in London on
June 20 where they will present their plans to the LBMA's 76
members, which include banks, metals refiners and miners.
Among those in contention are the London Metal Exchange,
exchange-traded fund provider ETF Securities, commodities
information provider Platts--all of whom have said they have
applied to replace the fix. Financial information company Thomson
Reuters Corp. has also submitted a proposal, a person familiar with
the matter said, while CME Group Inc. recently declared an interest
although it is unclear whether it made a formal proposal to the
LBMA.
"We are working closely with the precious metals industry and
the LBMA 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," Harriet Hunnable,
managing director of metals at CME Group, said in a statement last
month.
The fix is a 117-year-old daily ritual that provides a benchmark
that is used to price, for example, mining sales contracts and
exchange-traded funds. In recent years, the fix has been set daily
at noon following a conference call by representatives of Barclays
PLC, HSBC Holdings PLC and Deutsche Bank AG. But the benchmark will
be set for the final time in August, following Deutsche Bank's
decision earlier this year to resign from the fixing panel as part
of a wider retrenchment of its commodities business. According to
people familiar with the matter, the process was deemed unviable
with only two panel members.
The LBMA's effort to find an alternative to the historic
benchmark comes as the silver fix and a similar process for setting
the benchmark price of gold 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.
The LBMA said June 6 that a survey of around 440 market
participants showed a clear desire for an electronic, auction-based
benchmark with an increased number of contributors.
ETF Securities told The Wall Street Journal earlier in June that
its proposal was along these lines. Platts has made a similar
proposal, according to a person familiar with the situation.
One of the key ingredients for a successful replacement to the
London silver fix will be its attractiveness to market participants
as a platform for physical trade, said Adrian Ash, head of research
at gold and silver dealer BullionVault.
"The issue with the fix is it is a benchmark in hindsight," Mr.
Ash said. "It doesn't exist to create a reference price, it exists
as a dealing point."
Thomson Reuters and Platts, a McGraw Hill Financial Inc.-owned
company, 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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