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Chinese banks won't be part of new gold benchmarking at start, source tells Reuters

Section: Daily Dispatches

New Era of Gold Benchmarking to Start with Handful of Pioneers

By Clara Denina
Thursday, March 19, 2015

LONDON -- A handful of banks will start setting gold prices electronically on Friday, sources with direct knowledge of the matter said, as Intercontinental Exchange completes a sweeping change to London's bullion benchmarks and dispenses with the century-old gold "fix."

Since 1919, representatives from four or five banks have agreed a twice-daily price on which their customers -- producers, consumers, and investors -- could trade and value gold.

Sweeping reform triggered by a regulatory push for more transparency after the Libor interest rate-rigging scandal broke in 2012, saw banks stop acting as both data providers and market makers. ...

Banks will still submit orders during the process, as they currently do.

"I would like to think (there will be) more than the current (four) ... but we'll have to wait and see," a source with direct knowledge of the matter said.

Current providers of the gold "fix," Barclays, HSBC, Bank of Nova Scotia, and Societe Generale, declined to comment on whether they will participate. ...

The LBMA, which will retain intellectual property of the new benchmark, had said that 11 entities intended to participate in the new mechanism from the start.

Industrial and Commercial Bank of China, Bank of China International and China Construction Bank, which are ordinary members of the LBMA, were unlikely to be in the list of new participants at this stage, the first source said. ...

... For the remainder of the report:


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