By Ese Erheriene
LONDON--The London Bullion Market Association on Friday said it
has shortlisted five companies to manage a new electronic gold fix,
the latest in a series of changes to the precious metals markets as
a result of scandals found in some global benchmarks.
In a statement, the LBMA said it received eight proposals, and
has cut the list down to five: Autilla Ltd. (with Sapient Corp.);
CME Group Inc. (with Thomson Reuters Corp.); Intercontinental
Exchange Inc.; EBS Service Co. Ltd., a unit of ICAP PLC; and the
London Metal Exchange, a unit of Hong Kong Exchanges & Clearing
Ltd.
A winner is expected to be chosen by market consensus in
November with the fix expected to go live between the end of the
year and early 2015, the LBMA said in a statement.
"We are keen that as many market participants are involved in
the process. We are also specifically looking to identify those
participants who are willing to take part in the launch of the new
mechanism," said Ruth Crowell, chief executive of the LBMA.
London remains the world's largest trading center for precious
metals. Total demand for gold last year was $184 billion, according
to the World Gold Council.
The announcement comes the day after the LME won a bid to manage
the platinum and palladium fixes. That had surprised some in the
industry. Earlier this year, CME and Thomson Reuters won the rights
to manage an electronic silver price, and many had expected the
same partnership to be a shoo-in for the other fixes.
"After the LME won the job of administering the platinum and
palladium fixes earlier this week, we should expect strongly
competitive pitches next week," said Adrian Ash, head of research
at BullionVault, a physical gold and silver market for private
investors online, and an ordinary member of the LBMA.
Since 1919, the gold benchmark has been set through a private
arrangement among members of London Gold Market Fixing Ltd. At the
moment, four banks meet on twice-daily conference calls: Bank of
Nova Scotia-ScotiaMocatta; Barclays Bank PLC; HSBC Bank USA NA; and
Société Générale SA.
The benchmark is used by a range of firms, including mining
companies and exchange-traded funds.
According to an LBMA survey of market participants, 69% of the
130 respondents said they use the gold fix on a daily basis, while
83% said that at least a proportion of their trading was carried
out based on the gold fix.
Write to Ese Erheriene at ese.erheriene@wsj.com
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