International derivatives marketplace CME Group Inc (NASDAQ:CME) and leading provider of intelligent information for businesses and professionals Thomson Reuters Corp (NYSE:TRI) today announced the implementation of new measures to improve and further develop the LBMA Silver Price Benchmark. The enhancements stem from ongoing consultation with participants and approval of the independent Oversight Committee.
These new measures follow the implementation of a circuit breaker in January this year, with the mechanism aimed at further developing the LBMA Silver Price Benchmark and protecting its integrity. This enables the auction to be stopped, reset and restarted to address significant price movements during the auction, which are inconsistent with the underlying market.
The new measures include:
- Introducing a blind auction: The aggregate bid and offer volumes will not be disclosed during the auction round. Instead, at the end of each auction round, the aggregate buy and sell volumes will be publicly available.
- Sharing the imbalance in the auction: The Silver price is established when the auction is determined as balanced, i.e., at the end of a round, the total of buy and sell orders are within a predefined threshold. When the auction is complete, the amount required to balance the buy and sell orders will be shared equally among all registered participants of the auction.
- Increasing the predefined threshold: In exceptional circumstances, the calculation agent can increase the imbalance threshold during an auction, within an approved range, to establish the LBMA Silver Price and settle the auction.
The measures are set to be implemented on May 16, 2016.
Ruth Crowell, LBMA Chief Executive, commented:
“I’m delighted CME Group and Thomson Reuters have continued to put in further enhancements in the electronic auction. I hope this will further encourage other participants to take part in the LBMA Silver Price.”
Gavin Lee, Head of CME Benchmark Services, commented:
“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. These measures ensure that the LBMA Silver Price remains representative of the underlying market. And, in consultation with Silver market participants, we are always looking for new ways to develop this benchmark further.”
Tobias Sproehnle, Head of Benchmark Services, Thomson Reuters said:
“These changes together with a comprehensive consultation with the broader silver community – producers, intermediaries and consumers – are a further demonstration of Thomson Reuters and CME Group’s commitment to providing innovative, market leading benchmarks for the Silver market.”
You can view the official announcement on the collaboration by clicking here.