Photo by: Bloomberg
JOHANNESBURG (miningweekly.com) Following market consensus, the London Bullion Market Association (LBMA) on Friday announced that the Chicago Mercantile Exchange (CME) and Thomson Reuters Benchmark Services have been selected to operate the London silver price mechanism.
This comes as the 117-year-old London silver price benchmark, set by Deutsche Bank, HSBC and Bank of Nova Scotia, is due to be abandoned on August 14.
The price mechanism proposed by the CME and Thomson Reuters met the LBMA’s request for proposal criteria, in that it was electronic, auction-based and auditable, while remaining tradeable with an increased number of direct participants.
In terms of the division of responsibilities, CME would provide the price platform and methodology, while Thomson Reuters would provide the administration and governance.
The LBMA, in turn, would develop a process of accreditation for silver price participants, with the legal aspects of this division of responsibilities to be finalised prior to the new price mechanism going live.
“In the meantime, the LBMA will work closely with CME and Thomson Reuters to prepare the London Silver Price mechanism for testing in early August,” the association said in a statement.
Commenting on the announcement, LBMA CEO Ruth Crowell said there was a clear market consensus on the CME and Thomson Reuters proposal.
“The LBMA liaised throughout the consultation process with the Financial Conduct Authority and is grateful for all the support, comments and feedback it has received from all market participants.
“We will work in partnership with CME, Thomson Reuters and price participants to implement the solution in time for testing in early August and to go live on August 15,” she remarked.
This consensus was gained during the LBMA’s market consultation, which involved two market surveys, a seminar and numerous meetings with market participants, solution providers and regulators.