CME Group & Thomson Reuters Revamp LBMA Silver Benchmark

The companies are aiming to enhance the mechanism of the calculation of the benchmark price of silver.

One of the leading derivatives exchanges in the U.S. and globally, CME Group, has announced that together with Thomson Reuters it is implanting new measures to optimize the calculation of the benchmark price of silver on the London Bullion Market Association (LBMA).

The changes are designed to reflect the introduction of a circuit breaker functionality on the silver market which was implemented in January 2016. After the changes, the auctions on the silver market can be stopped, reset and restarted in cases when significant price movements during the auction are inconsistent with the market conditions that have been observed.

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CME Group and Thomson Reuters have introduced a blind auction, where the aggregate bids and offers are not going to be disclosed during the auction, but only after it ends. In addition any imbalances in the auction will now be shared equally among all participants in the auction.

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The companies have also implemented an increased predefined threshold, where during extreme market conditions the calculation agent can increase the imbalance threshold throughout an ongoing auction, within an approved range, thereby establishing the LBMA Silver Price and settling the auction.

The changes have been approved by the Oversight Committee and will be implemented starting from May 16th 2016.

Commenting on the updates, LBMA’s CEO, Ruth Crowell, said: “I hope the changes will further encourage other participants to take part in the LBMA Silver Price Benchmark.”

“Since the new benchmark was launched, CME Group, alongside Thomson Reuters and the Oversight Committee, has sought to introduce measures that will enhance and develop it to the benefit of the Silver market. In consultation with Silver market participants, we are always looking for new ways to develop this benchmark further,” added Gavin Lee, who is Head of CME’s Benchmark Services unit.

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