Last updated: 14:00 / Friday, 11 July 2014
Commodities

World Gold Council Forum Discusses Reform or Replacement of the Gold Fix

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World Gold Council Forum Discusses Reform or Replacement of the Gold Fix
  • “We are at the start of a process that will lead to a reformed and modernised gold benchmark which attracts a broader range of market participants"

The World Gold Council, the market development organisation for the gold industry, has convened a roundtable debate to discuss how to modernise the London Gold Fix.

The meeting was attended by 34 delegates representing all parts of the industry including; central banks, bullion banks, refiners, ETFs and other gold investment product sponsors, exchanges and industry bodies.

Hosted by the World Gold Council’s Chief Executive Officer, Aram Shishmanian, delegates discussed the requirements and desired characteristics for a reformed benchmark, along with the pros and cons of any alternative price-setting mechanism.

The key points emerging in the discussion were as follows:

  • The need for a single, trusted, benchmark reference price is in the interests of the millions of people involved in the gold market around the world  
  • The imperative for continuity of price discovery to avoid market disruption
  • The importance of expanding involvement in the process to reflect the full range of market participants
  • The importance of a  local  London price, which would reflect both the deep pool of liquidity available in London, as well as London’s historic and current position as the primary trading centre for gold
  • Any solution will need to be settled locally and physically
  • The need for a transparent benchmark which mitigates any potential reputational risk for those administering the benchmark
  • The requirement to separate market making from benchmark administration, and to meet all the other IOSCO principles including independent oversight

Natalie Dempster, Managing Director, Central Banks and Public Policy said: “We are at the start of a process that will lead to a reformed and modernised gold benchmark which attracts a broader range of market participants.

There was strong support for the World Gold Council’s key principles for reform.  We believe it should be based on executed trades and a tradable price, it should have highly transparent input data, should be calculated from a deep and liquid market, and represent a physically-deliverable price.”

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