London’s near century-old gold fix will be replaced Friday by an electronic system run by U.S.-based ICE Benchmark, marking the end of the days traders at four banks used to agree by phone twice-daily prices used by miners to central banks to deal and value bullion.
More firms able to participate in the benchmark will make the $18 trillion global market more transparent, said Ruth Crowell, chief executive of the London Bullion Market Association (LBMA) in a statement last month.
While LBMA wouldn’t reveal the participants for the new pricing system until Friday, it is understood that China will participate directly in setting the new price fix. This, in theory, would make inflows and outflows out of the world’s second largest economy, and one of the largest gold buyers, more apparent, according to Marketwatch.
The change in the way bullion prices will be set from Friday on was triggered mainly by Deutsche Bank’s decision to withdraw from precious metals benchmarks last year. The move left Societe Generale SA, Bank of Nova Scotia, HSCB Holdings Plc and Barclays Plc to set gold prices.
Some of those names may continue to be part of the new pricing system, together with JP Morgan, UBS, Credit Suisse, Goldman Sachs, Citi, Morgan Stanley and Standard Chartered, according to market rumours.
The London Gold Market Fixing Ltd was founded in 1994 but only since 2011 have organizations wishing to reproduce or utilize gold fixing data been required to purchase a licence from the company.