CME and Thomson Reuters take over Silver Fix from Deutsche, HSBC, and Scotiabank

The mandate to operate the London Silver Fix has been awarded to CME Group and Thomson Reuters when the existing system is disbanded next month.

The two corporations will serve different roles, with CME Group providing the price platform and methodology, and Thomson Reuters being responsible for administration and governance.

At present, the silver fix is set each day at noon by three large banks, which are Deutsche Bank, HSBC and Scotiabank by way of a daily conference call, however there has been a certain degree of scrutiny recently as a result of the allegations leveled at a number of banking institutions with regard to the possibility of benchmark manipulation.

The industry backlash against perceived market manipulation by some of the largest banks in the business sees the silver fix handed over to multinational media and information firm Thomson Reuters and North American derivatives marketplace CME Group, and will include the 4.00pm fix.

With increased attention from regulators in the wake of benchmark manipulation in other markets, the current operator of the benchmark – London Silver Market Fixing Ltd – said in May it would stop running the daily call, signaling the end of a 117 year old procedure.

The London Bullion Market Association has stated today that this particular market consensus was also supported by the independent review conducted by Jonathan Spall of G Cubed Metals Ltd.

As part of his review, Mr. Spall carried out in-depth interviews with the seven companies who delivered presentations at the seminar on the 20th June. Feedback from the surveys, the seminar together with the conclusions of the independent review were presented directly to a meeting of the LBMA Management Committee, LBMA Market Makers and the Data Working Group.

In terms of the division of responsibilities, CME Group will provide the price platform and methodology and Thomson Reuters will provide the administration and governance. The LBMA will develop a process of accreditation for silver price participants. The legal aspects of this division of responsibilities will be finalised prior to go live. In the meantime the LBMA will work closely with the CME Group and Thomson Reuters to prepare the London Silver Price mechanism for testing in early August.

Ruth Crowell, Chief Executive of the LBMA commented “I am delighted that there was a clear market consensus for the CME Group & Thomson Reuters joint proposal. The LBMA liaised throughout the consultation process with the FCA. The LBMA is grateful for all the support, comments and feedback it has received from all market participants”

“A particular thank you to ISDA, and the Silver Institute for all their constructive support of the LBMA during this consultation process. We will work in partnership with the CME Group, Thomson Reuters and price participants to implement the solution in time for testing in early August and go live on the 15th August” concluded Ms. Crowell.

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