First Chinese bank joins new LBMA gold price benchmark

Otmane El Rhazi from The Bullion Desk.

Bank of China (BoC) is the first Chinese participant in the new IBA gold price benchmarking process, the LBMA said on Tuesday.

This brings the number of participants to eight alongside JP Morgan Chase Bank, Scotiabank, HSBC, Société Générale, UBS, Barclays and Goldman Sachs in the LBMA Gold Price, which formally replaced the near-century-old London Gold Fix on March 20.

“As one of the LBMA’s founding members, it is appropriate that [BoC] should be the first Chinese participant,” the LBMA said

“Although being the world’s largest gold producer and consumer, China has never played a major role in the global gold fixing,” BoC general manager Yu Sun said.

“Bank of China’s direct participation in the gold auction would reinforce the connection between the Chinese domestic market and overseas markets, make the international gold price better reflect the supply and demand in China, and help to promote the internationalization of the Chinese gold market,” he added.

ICE subsidiary ICE Benchmark Administration (IBA) president Finbarr Hutcheson told delegates at the International Derivatives Expo last week that more banks would join the benchmark in the coming weeks.

The twice-daily gold fix, which had been in operation since September 12, 1919, came under increased regulatory and media scrutiny. A third-party operator was seen as a critical step in modernising the image of the process, while also providing enhanced transparency and compliance with legislation.

IBA, which was established in April 2013 to administer benchmarks, now provides the price platform, methodology and overall administration and governance for the LBMA gold price.

 

(Editing by Mark Shaw)

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