London gold market moves step closer to reform
London's gold market moved a step closer to reform of a century-old method of setting the price of gold, authorities said Wednesday.
London Gold Market Fixing Limited -- comprising four banks that set the gold fix twice per day -- announced in a statement that it has begun searching for a new company to oversee the scandal-hit process after top-level reform talks.
"LGMFL announces ... its intention to appoint a third party administrator to assume responsibility for the administration of the gold fixing process," it said.
The grouping added that it was also seeking to recruit an independent chairperson for its board.
The LGMFL added that an industry body, the London Bullion Market Association, will also help coordinate the overhaul.
The industry is seeking to modernise the so-called London Gold Fix, following talks over potential changes last week.
London's Gold Fix, the global benchmark, affects the flow of billions of dollars worldwide every day. But it has been tainted by a rigging scandal and attacked by critics as old-fashioned.
The benchmark gold price is set by four banks at 10:30 am London time (0930 GMT) and 3:00 pm, via teleconference.
The banks -- Britain's Barclays and HSBC, Canada's Scotiabank and Societe Generale of France -- all agree the price twice daily. Germany's Deutsche Bank pulled out of the panel earlier this year.
The process begins with the so-called spot price of gold, which is based on the current market rate of contracts for physical delivery of the metal.
The four banks must then declare whether they are interested in buying or selling at this level. The price can fluctuate depending on the balance of supply and demand, and settles on a "fixing".
The system lurched into crisis this year when Barclays was fined more than £26 million ($45 million, 33 million euros) by British regulators after a ex-trader at the troubled bank admitted attempting to manipulate the gold price.
Some analysts believe however that the market price of gold, which is driven by investment and jewellery demand, could climb as a result of an overhaul.
© 2014 AFP