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 devil's metal". But now, after 117 years of operation, the London silver fix - an integral part of the city's $1.6tn-a-year silver market - is on its deathbed. The three banks that arrange silver's 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 Bank's 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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