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I still don’t trust the feeeeeeelth

Posted by Scruffy @ 8:32 on July 18, 2014  

Last week, Thomson Reuters and exchange operator CME Group won a race to operate a new electronic version of London’s silver fix. Many market participants hope gold will follow the same path.

While the new silver benchmark will maintain the existing auction style process to match buy and sell bars of the precious metal, electronic trading will replace the closed teleconference run by its member banks and an algorithm will be used set the opening price.

“If the gold reform goes the way of silver it will be a significant improvement across many areas,” said Rosa Abrantes-Metz, adjunct professor at New York University Stern School of Business, who has advised regulators on financial benchmarks.

Established by a group of bullion brokers in 1919 at the request of the UK Treasury, the gold fix occurs twice daily, at 10.30am and 3pm. The four member banks join a secure conference call in London. The starting price is derived from the over-the-counter and futures markets. Each bank then says how many gold bars it wishes to buy or sell on behalf of its clients, and the price is moved up or down to reflect the net interest.

The process has been criticised for a lack of transparency as the banks publish none of the data that determine the benchmark. The World Gold Council, the marketing body for the gold industry, has said the gold benchmark should be based on data that were “highly transparent, published and subject to audit.”

The gold fixing banks said they had completed a review of the structure and operation of the fix and found it was “broadly aligned” with principles for financial benchmarks set by Iosco, the umbrella body for global regulators. A source familiar with situation said the overhaul was driven by the need to keep in line with new regulations.

http://www.ft.com/intl/cms/s/0/f01a1806-0cfd-1
1e4-bf1e-00144feabdc0.html?siteedition=intl#axzz37irWKwFe

 

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Post by the Golden Rule. Oasis not responsible for content/accuracy of posts. DYODD.