ETF Securities, Platts Declare Interest in Overseeing London Silver Fix

By Francesca Freeman 

LONDON--ETF Securities and Platts on Thursday added their names to the list of companies interested in overseeing the new London silver fix.

The exchange-traded funds pioneer and the commodities information provider said they have joined the London Metal Exchange and CME Group Inc. in registering their interest in providing a replacement for the benchmarking process, which will be set for the final time in August.

ETF Securities has been in talks with the London Bullion Market Association about hosting a silver benchmark for several weeks, said founder and chairman, Graham Tuckwell.

"I've put a proposal forward. It's just a matter of refining the detail to get it in an optimal form for LBMA members," Mr. Tuckwell said.

The LBMA, a trade association, is undertaking a market consultation to find a replacement for the fix, which sets a price used by mining companies to settle sales contracts, to price such derivatives as exchange-traded funds and affects global jewelry prices.

ETF Securities' proposal is based on the company's silver fund, which trades on the London Stock Exchange and is physically-settled through the LBMA's clearing system.

"The banks that are involved in the metal markets would put their bids and offers into the option," said Mr. Tuckwell. "It's open, it's transparent, every bid and offer that goes into the option can be audited and supervised."

Commodities information provider Platts said it is also interested in hosting the silver fix.

"We have held conversations with the LBMA and we look forward to continued collaborative engagement regarding price discovery in the silver market," a spokeswoman for the McGraw Hill Financial Inc.-owned company said.

Financial information provider Thomson Reuters Corp. has also expressed an interest, according to a person familiar with the matter. The London Metal Exchange and CME Group, two major commodities exchanges, have already said they are both separately talking with market participants and the LBMA about providing a new silver fix.

A spokesman for the LBMA said the body is yet to reach a decision on which proposal to back, and it "assessing the feedback and considering those who may be interested in assisting us" in launching a new benchmark.

The silver fix has gone through various iterations in its 117-year history. Most recently, it has been set daily at noon by way of a conference call involving representatives from Deutsche Bank AG, HSBC Holdings PLC and Bank of Nova Scotia. But when Deutsche Bank declared its intention to leave the process as part of a wider reduction of its commodities business, the fix administrator announced the end of the benchmark.

The silver fix and the gold fix, which is set by four banks and has been around since 1919, have recently have come under the scrutiny of regulators as part of a broader examination of financial benchmarks in the wake of a global scandal involving the rigging of interest rates. Last month, Barclays was fined GBP26 million ($43.5 million) by the U.K.'s Financial Conduct Authority for lax controls after one of its traders manipulated the gold fix at the expense of a client.

Thomson Reuters and Platts compete with News Corp.'s Dow Jones & Co., publisher of The Wall Street Journal and Dow Jones Newswires, on business news.

Write to Francesca Freeman at [e-mail]

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