ICE’s feedback on LBMA gold price consultation: Three matters for clarification

Global network of exchanges and clearing houses Intercontinental Exchange Inc (NYSE:ICE) has published a feedback statement on the responses received to the ICE Benchmark Administration (IBA) market consultation on the LBMA Gold Price and the gold auction process.

The IBA consultation sought market feedback on three areas of the auction process which included the approach for determining the LBMA Gold Price in the event that the minimum number of participants are not present for an auction; a review of the long-standing convention to add a ‘Seller’s Premium’ to the benchmark price for settlement purposes; and the usage of the prices published in currencies other than US Dollars.

IBA received responses from market participants and stakeholders, including financial institutions, refining and mining firms. The Gold Oversight Committee reviewed the feedback and IBA will implement the resulting changes from the market consultation over the coming months.

IBA became the administrator of the LBMA Gold Price in March this year and the new electronic auction platform has strengthened the benchmark, with average daily volumes for the morning and afternoon gold auctions more than doubling, compared with the five months prior to IBA’s administration. The number of direct participants has also risen from four to ten since March.

IBA operates twice daily, physically settled, electronic and tradable spot gold auctions at 10.30am and 3.00pm UK time. The price formation is in US Dollars (USD), with indicative settlement prices in Euro (EUR) and Pound Sterling (GBP). At the end of the auction IBA publishes the LBMA Gold Price in USD, EUR and GBP.

Since April 1, 2015, the LBMA Gold Price is a regulated benchmark under the supervision of the Financial Conduct Authority (FCA).

For the official announcement from ICE, click here.

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