New LBMA Gold Price Fixing Still Leaves Only Six Market Makers

Despite the launch of the new benchmark LBMA gold price fixing and the transparency of an electronic market making process,

(Photo: Bloomberg)
(Photo: Bloomberg)

Last Friday, the Intercontinental Exchange’s (NYSE: ICE), ICE Benchmark Administration (IBA) successfully launched the previously announced new LBMA Gold Price fixing. The old fashioned bid submitting mechanism used since 1919, has been scrapped in favor of a more transparent electronic trading auction.

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The new measure is independently administered and transparent with IBA at the center of the auction. With the new bidding process in place, one specificity of the gold market remains as it used to be – the number of market makers. On the first day of the new LBMA Gold Price Fixing electronic auction a total of six banks were involved.

Barclays, Goldman Sachs, HSBC Bank USA NA, The Bank of Nova – ScotiaMocatta, Societe Generale and UBS were the direct participants last Friday transacting a total of 95,568 ounces bought and 90,348 ounces sold across the auctions at prices between $1,171,75 and $1,183.10.

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The IBA operates twice daily with physically settled, electronic and tradable spot gold auctions at 10.30am and 3.00pm London time. While the settlement is denominated in dollars, the participants in the auction can settle orders in three currencies: USD, EUR and GBP. The LBMA Gold Price Fixing will become a regulated benchmark under the U.K. Financial Conduct Authority (FCA) Rules starting from April 1st, 2015.

The President of the ICE Benchmark Administration, Finbarr Hutcheson, said: “Following Friday’s transition, the LBMA Gold Price benefits from improved transparency with all auctions now taking place on WebICE, ICE’s state-of-the-art and widely distributed, front end trading platform.”

“Importantly, house and client orders can be segregated on WebICE and all participants, including end clients, can view and manage their own orders on-screen from anywhere in the world. We would like to thank all participants and the London Bullion Market Association (LBMA) for their support in transitioning this globally important benchmark,” he added.

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