Today CME Group and Thomson Reuters jointly announced that Morgan Stanley will participate in the London silver price fix, aka LBMA Silver Price, in a bid to further enhance the transparency of the system that replaced a 117-year-old ritual following a series of fixings that deviated from the spot price benchmarks and cost investors billions of dollars.
The global financial services firm will participate in the daily electronic auctions that set the LBMA Silver Price benchmark. Participants enter orders electronically to trade at a proposed starting price and if there’s no suitable match between buy and sell orders, an algorithm picks a new price for a second round of bidding.
CME Group and Thomson Reuters Corp. co-administrate the LBMA Silver Price process. CME Group provides the electronic auction platform on which the price is calculated and Thomson Reuters is responsible for administration and governance of the benchmark as well as distribution.
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The addition of Morgan Stanley to the panel of price participants will increase the number to seven entities including China Construction Bank, HSBC Bank USA NA, JPMorgan Chase Bank, The Bank of Nova Scotia, The Toronto Dominion Bank and UBS AG.
LBMA Silver Price was launched in August 2014 after the silver fix process went electronic, replacing a telephone-based system that had been used daily since 1897. The informal bank-run silver fix process came under scrutiny from regulators as part of a wider probe into key financial benchmarks.
Commenting on the news William Knottenbelt, Senior Managing Director at CME Group, said: “We’re very pleased to have Morgan Stanley join as a participant in the LBMA Silver Price. The addition of another member brings greater depth and diversity to the market and underlines the ongoing globalisation of the Silver Price as a leading, liquid precious metals benchmark.”
Ruth Crowell, Chief Executive of the LBMA, added: “I am delighted that Morgan Stanley has joined the LBMA Silver Price auction process. They add depth and liquidity to the auction and I look forward to other market participants joining in the future.”
Tobias Sproehnle, Head of Benchmarks, Thomson Reuters, concluded: “With the addition of Morgan Stanley to the panel, the LBMA Silver Price provides even deeper insight into the global silver market. We continue to welcome new participants to this essential mechanism for the markets.”