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The London Market Needs YOU!

Our guest blogger, Richard Firth, returned to Hong Kong yesterday. As an antidote to jet-lag, Richard has sent us this blog in relation to a hot commodities topic:  the London fixing benchmark for silver:

  • market consultation initiatives;
  • background;
  • issues; and
  • relevant websites, contact details and other information.

MARKET CONSULTATION INITIATIVES

The purpose of this blog is to act as a “heads up” for some readers, and as a reminder to others, of  two recently announced consultation initiatives in  respect of which market participation is needed:

1. For ISDA members only: a conference call tomorrow, Tuesday, 20 May at 12 noon (London time) to exchange information and views on confidential basis.

Should you wish to take part, pre-registration by no later than lunchtime in London today is required.  ISDA’s contact details are at the end of this blog.

2. London Bullion Market Association (LBMA): the LBMA announced on Friday that it:

  • had launched an on-line survey seeking the views of market users around the world;
  • would like to talk to companies interested in contributing in the future  to the London Silver price; and
  • would welcome discussions with  entities which might be interested  in  the administration of the London Silver price.

LBMA’s contact details are also at the end of this blog.

BACKGROUND

The London Silver Market Fixing Limited (LSMFL) which for over 110 years has been fixing the price of silver will no longer do so with effect from 14 August 2014.  The current members are three of the “bullion” banks: Deutsche Bank, HSBC, and Scotiabank. A detailed description of the four step process used by the LSMFL is on their website – link at the foot of this blog – but in summary:

  • the three current members agree the price fix once a day at 12 noon (London time);
  • Customers place orders;
  • Members test the market for demand and supply; and
  • Price is fixed to balance demand and supply.

Note: the bullion market in London is primarily an  over-the-counter market.  Bullion is not currently traded on The London Metal Exchange. 

ISSUES

There are a number of distinct but related issues including:

  • ISDA after consultation with its members, typically publishes best-practice statements and guidance notes following various events affecting price sources to assist the functioning of the OTC derivative markets especially where there is a discontinuance of a price source “hard wired” into existing documentation through the incorporation of the Commodity Reference Prices in Sub-Annex A to the 2005 ISDA Commodity Definitions; and
  • agreeing a substitute mechanism for the London Silver Market Fix. Here the LBMA  under its new Chief Executive has picked up the baton.  The LBMA is a  trade association which was formally established by the Bank of England in 1987 but whose origins go back to City of London’s and (Great Britain’s) “glory days”  in the nineteenth century.  Today, the LBMA represents the key players and their clients in the gold and silver bullion market which is centred in London but which has an international footprint.  Its members include derivative and physical traders, refiners, fabricators as well as those providing vault storage and secure carrier services.

The key current role of the LBMA is to ensure that the quality of the bullion traded is uniform, which it does through the maintenance and publication of the Good Delivery list which sets the benchmark for silver and gold metal bars across the world-quality assured and assayed bullion.

WEBSITES, CONTACT AND OTHER DETAILS

The London Silver  Market Fixing Limited (TLSMFL)

Website: https://www.silverfixing.com/

Contact details:

Current Chairman: Scotiabank, Simon Weeks

c/o: Hackwood Securities Limited, One Silk Street, London EC2Y 8HQ

Telephone number:  +44 (0) 20 7456 2000

International Swaps and Derivatives Association, Inc.(ISDA)

Website: http://www2.isda.org/

Telephone number:+44  (0) 20 3088 3550

Senior Director for Commodities: Peter Werner

pwerner@isda.org

http://primefinancedisputes.org/images/resumes/Peter%20Werner.pdf

Contact for registration on tomorrow’s conference call:

Communications,Marketing and Legal Associate: Rose Milburn

rmillburn@isda.org

London Bullion Market Association (LBMA)

Website:http://www.lbma.org.uk/

Telephone number:+44 (0) 20 7796 3067

Chief Executive: Ruth Crowell http://www.lbma.org.uk/our-people

mail@lbma.org.uk

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