CME Group & Thomson Reuters Win Bid For Silver Fix

July 11, 2014

CME Group will provide the price platform and methodology, and Thomson Reuters will run administration and governance.

[This article originally appeared on our sister site, Europe.ETF.com.]

The CME Group & Thomson Reuters have been selected to provide the solution for the London Silver Fix, which will come to an end next month.

The CME Group will provide the price platform and methodology, while Thomson Reuters will provide the administration and governance. The LBMA will develop a process of accreditation for silver price participants.

The pair's victory follows the LBMA’s market consultation, which involved two market surveys, a seminar and numerous meetings with market participants, solution providers and regulators. It also included submissions from ETF Securities, the London Metal Exchange, and Platts.

The legal aspects of the division of responsibilities between the pair will be finalised prior to go live. The LBMA will also work closely with the CME Group and Thomson Reuters to prepare the London Silver Price mechanism for testing in early August.

The price mechanism solution meets the LBMA Request for Proposal process criteria as it is electronic, auction-based and auditable. It is also tradeable with an increased number of direct participants. The solution was chosen as it fulfilled criteria laid out following feedback from market participants contributing to the first survey.

Ruth Crowell, chief executive of the LBMA, said in a statement: “I am delighted that there was a clear market consensus for the CME Group & Thomson Reuters joint proposal. The LBMA liaised throughout the consultation process with the FCA… We will work in partnership with the CME Group, Thomson Reuters and price participants to implement the solution in time for testing in early August and go live on the 15th August.”

The London silver fix, a global benchmark for spot silver prices, will end on August 14th. It is a spot price set daily via teleconference by the three fixing members - Deutsche Bank, HSBC and Bank of Nova Scotia. This style of price setting, known more commonly as the over-the-counter market, has come under regulatory scrutiny following the LIBOR scandal two years ago. It has prompted banks involved in the process to withdraw.

Deutsche Bank resigned its seat on the London gold and silver fixes without finding a buyer prior to the announcements that the London Silver Fix would end.

According to a note from the LBMA, there was a clear market consensus for the CME Group & Thomson Reuters proposal.

 

 

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