Three years after outbidding six other competitors for the contract,
CME Group/Thomson Reuters is stepping down from providing the London
silver fix to the London Bullion Market Association.
LBMA officials and the two entities CME Group and Thomson Reuters jointly announced
March 3 that both entities will remove themselves from their roles in
relation to the LBMA Silver Price auction. The two entities will
continue execution of their current responsibilities until a new
silver benchmark provider can be named.
CME Group/Thomson Reuters assumed control of executing the daily
silver price fix on Aug. 14, 2014, from London Silver Market Fixing
Company. CME Group has been providing the electronic auction platform
on which the price is calculated and Thomson Reuters has been
responsible for administration and governance of the LBMA silver price.
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Until the 2014 transition, the London silver price fix was
determined under a system that had developed over three centuries and
originally took place in London coffee shops.
According to the LBMA, in a statement at its website describing the 2014 transition, “The
London Silver Fix had been a global benchmark for 117 years. This new
process for establishing the new LBMA Silver Price will maintain
continuity with the earlier silver fixing process for market
participants while also increasing transparency via an electronic
platform for the auction. It continues to be London-based and offers a
fully IOSCO-compliant solution to the London bullion
marketplace. The earlier benchmarking process has been followed in
order to minimise any possible disruptions and enable a seamless
transition for the market.”
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According to LBMA and Thomson Reuters, the London silver fix is set in
U.S. dollars per troy ounce in a series of auction rounds, each
lasting 30 seconds:
➤ At the start of each auction round, an algorithm determines the
price that is displayed on the auction platform
➤ During each round, market participants submit buy or sell
quantities in specified units called lakhs (100,000 ounces) or quarter lakhs.
➤ At the end of each round, buy and sell orders are compared to
determine equilibrium. Once equilibrium is achieved, the auction will
close and the LBMA Silver Price is published.
➤ Equilibrium is reached when the difference between buy and sell
orders is within a pre-defined tolerance (3 lakhs).
➤ Orders are automatically netted and matched to produce trades confirmations.
Seven price participants are accredited to contribute to the LBMA
Silver Price: China Construction Bank, HSBC Bank USA NA, JPMorgan
Chase Bank, Morgan Stanley, The Bank of Nova Scotia – ScotiaMocatta,
The Toronto Dominion Bank and UBS AG.