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Londons silver price fix dies after nearly 120 years
Key Excerpts from Article on Website of Financial Times
Posted: May 19th, 2014
http://www.ft.com/intl/cms/s/0/db3188b8-db46-11e3-94ad-00144...
It was born in the late 19th century when a handful of London bullion dealers agreed to meet daily under a cloud of cigar smoke to set the price for the devils metal. But now, after 117 years of operation, the London silver fix an integral part of the citys $1.6tn-a-year silver market is on its deathbed. The three banks that arrange silvers global benchmark said on [May 14] that prices would be fixed for the final time at noon on August 14. The move comes on the heels of increased scrutiny by European and US regulators into precious metals price-setting following the Libor scandal and probe into possible forex market abuse. Deutsche Bank last month resigned its seats on the silver and gold fixes, after failing to find buyers, leaving just HSBC and Bank of Nova Scotia on the silver fix. The three banks said there would be discussions to explore whether the market wishes to develop an alternative to the benchmark. The regulatory attention has removed the lustre from the once-prestigious precious metals fixes, while legal action in the US has been an additional deterrent for potential new members. US lawyers have filed at least 20 class lawsuits alleging manipulation by the banks responsible for the gold fix. The demise of the silver fix will raise questions about the future of the other precious metals benchmarks platinum, palladium and, especially, gold. Following Deutsche Banks withdrawal, the gold fix can continue to operate effectively with four member banks, but critics say the process is old-fashioned and opaque, and needs to be overhauled.
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