After winning the silver fix, CME goes for the gold

After winning silver fix, CME goes for the gold

The Chicago Mercantile Exchange (CME) confirmed Thursday its intention to bid for the administration of the century-old London gold fix benchmark in partnership with ThomsonReuters.

“Having won the Silver Price mandate in partnership with Thomson Reuters, CME Group would be delighted to be part of this proposal process with Thomson Reuters and look forward to engaging with the London Gold market participants,” CME Group’s director of metals products, Harriet Hunnable, was quoted as saying.

She added the exchange would bid to be involved in a new process, which may turn the current twice-daily price-setting conference call into an electronic auction.

The move comes as the banks currently conducting the price setting process that is used by miners and central banks to trade and value the metal, announced Wednesday they are seeking to appoint an independent administrator.

Deutsche Bank’s exit from the process this year as it scales back its commodities business left Societe Generale SA, Bank of Nova Scotia, HSBC Holdings Plc and Barclays Plc to conduct fixings.

Currently the fix is calculated twice a day on telephone conferences at 10:30 a.m. and 3 p.m. London time. The calls usually last 10 minutes, though they can run more than an hour.

Firms declare how many bars of gold they want to buy or sell at the current spot price, based on orders from clients and themselves. The price is increased or reduced until the buy and sell amounts are within 50 bars, or about 620 kilograms, of each other, at which point the fix is set.

The industry has been pushing for a change as of late. Members of the World Gold Council met in London last week to discuss the issue, but did not reach an agreement.