ICE over Gold! IntercontinentalExchange takes over LMBA bullion price administration

Multinational group of exchanges and clearing houses Intercontinental Exchange (NYSE: ICE), has announced that following an extensive selection process facilitated by the London Bullion Market Association (LBMA), ICE Benchmark Administration (IBA) has been announced as the new administrator of the LBMA Gold Price. ICE Benchmark Administration expects to assume responsibility of the LBMA Gold Price in early 2015.

ICE has extensive experience in administering market-specific benchmarks, having taken over the administration of LIBOR in February 2014. By the summer of this year, IBA had already established rigorous oversight and surveillance mechanisms for LIBOR and the Paper sets out the IBA’s key findings so far on the administration of LIBOR include a summary of recent improvements to the LIBOR administration process as well as proposals for consultation on further enhancements to the LIBOR submission process.

The LBMA Gold Price will replace the Gold Fixing Price which has been in existence since September 1919. The price is set in London twice a day and provides a published benchmark price that is widely used as an international pricing medium by producers, consumers, investors and central banks.

As the new administrator for the LBMA Gold Price, IBA will transition to a physically settled, electronic and tradeable auction, with the ability to participate in three currencies: USD, EUR and GBP. Aggregated gold bids and offers will be published in real-time with the imbalance calculated and the price updated every 30 seconds. IBA will use the WebICE technology platform which will allow direct participants as well as sponsored clients to manage their own orders in the auction in real time via their own screens.

IBA will assume overall responsibilities for the London Gold Price as follows:

  • Governance of all LBMA Gold Price administrative processes including oversight, surveillance and decisions of methodology, systems and controls;
  • An electronic physically settled auction with live interest shown and orders taking in three currencies;
  • Well established tools (WebICE) for participants to manage their risk in the process – for Front Office, Compliance and Credit Risk; and
  • A fair and sustainable fee structure, designed to encourage direct participation from a diverse cross-section of market participants and broad use of the price as a benchmark.

Finbarr Hutcheson, President, ICE Benchmark Administration said: “We are delighted to have been selected by a combination of the LBMA and their members as the new administrator of the LBMA Gold Price. We look forward to working closely with the LBMA and the precious metals industry as we deliver an IOSCO-compliant benchmark that fulfils the requirements of market participants in an efficient and transparent manner.”

To read the full announcement from ICE, click here.


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