The banks running the century-old London gold fixing that’s used by miners and central banks to trade and value metal are proposing changes to the process, according to two people with knowledge of the matter.
The proposal is for an independent chairman and third-party administrator, said the people, who asked not to be identified because the information is private. Deutsche Bank AG’s exit from the process this year as it scales back its commodities business left Societe Generale SA, Bank of Nova Scotia, HSBC Holdings Plc and Barclays Plc to set the fixing price twice a day by phone.
A similar ritual for silver will be replaced by an electronic, auction-based mechanism run by CME Group Inc. and Thomson Reuters Corp. next month after Deutsche Bank’s planned withdrawal would leave just two banks to conduct fixings for that commodity. Precious metals are getting more attention from regulators after price-rigging in everything from interbank lending rates to currencies led to fines and overhauled financial benchmarks.
“Perceptions of the fix have been tarnished,” Adrian Ash, head of research at BullionVault, an online service for investors to buy and sell physical gold and silver, said in an e-mail today. While the current process works well, “with the new London silver price process set to start on 15th August, it was only a matter of time before the gold fix moved to review and reform as well.”
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