By Ese Erheriene
LONDON--Two more banks have been approved as direct participants
in the electronic London gold fix said Intercontinental Exchange
Ltd on Monday--taking the total number of participants up to
ten.
Morgan Stanley and Standard Chartered will start contributing
price information to the twice-daily LBMA Gold Price immediately,
alongside Bank of China Ltd., UBS AG (UBSN.EB), Goldman Sachs Group
Inc. (GS), Bank of Nova Scotia (BNS), Barclays Bank PLC (BCS), HSBC
Holdings PLC (HSBC), Societe Generale SA (GLE.FR) and JPMorgan
Chase & Co. (JPM).
"Being an active participant will enable Standard Chartered to
better serve our gold client base, and help promote a transparent
pricing mechanism for LBMA Gold Price setting," said Jeremy East,
head of metals trading at Standard Chartered Bank.
ICE Ltd. also confirmed that China Construction Bank is on track
to become the 11th gold auction participant. This follows the
announcement last Tuesday that Bank of China, one of China's
big-four state-owned lenders, had been chosen as the first Chinese
bank to join the process.
According to market participants, attracting a second Chinese
participant to the gold fix would be a coup for the London Bullion
Market Association in its advertisement of the gold fix as a global
benchmark.
"One of the themes the market has been talking about is the rise
of volume trading coming out of Asia, particularly out of China,"
said Tom Kendall, a precious metals strategist at LCM Metals.
Chinese participation "underlines its role as a global benchmark,"
he said.
China is steadily raising its profile in financial markets, from
commodities to equities. The Asian giant is taking steps to make it
easier for individuals and corporations to invest abroad. It is
also gunning for its currency, the yuan, to be declared an official
reserve currency, which would put it on a par with global
powerhouse currencies such as the dollar.
For some investors, this diversification of participants could
see participation extended to Indian banks. India vies with China
as the No. 1 consumer of gold and the two account for more than
half of global gold demand.
"It would be fitting if an Indian institution were represented
at the fix. There is a centuries old cultural attraction to gold
throughout the subcontinent, and the markets would...welcome
official Indian participation," said Rick Rule, chairman of Sprott
U.S. Holdings, a part of Sprott Inc. which oversees almost $5
billion in mining stocks and metals.
The LBMA gold price is used by a broad range of firms, from
miners to jewelry makers, to settle billions of dollars' worth of
gold trades daily.
Volumes have increased significantly since the electronic fix
was launched in March, according to the ICE. Average daily volumes
for the morning and afternoon gold auctions are more than double
compared with the five months before the electronic launch, it
said.
The change to an electronic platform was made as part of an
effort to reform financial benchmarks in the wake of allegations of
manipulation.
Write to Ese Erheriene at ese.erheriene@wsj.com
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