* Standard Bank London to sell 60 pct stake to ICBC
* Potential deal to be wrapped up much earlier than year-end - sources
By Clara Denina and Jan Harvey
LONDON, Feb 18 (Reuters) - South Africa's Standard Bank, now selling a controlling stake in its markets unit to China's ICBC, is emerging as a frontrunner to buy Deutsche Bank's place in the global gold price-setting process, sources familiar with the matter said.
A seat in the process - also known as the "fix" - to determine the benchmark gold price had long been considered a mark of distinction in the bullion market.
But the fix, along with other commodity benchmarks, has come under growing regulatory scrutiny since the Libor scandal last year.
Deutsche Bank said last month it was selling its seat at the fix, which it has held for two decades, after its recent decision to withdraw from the bulk of its commodities business.
European regulators have launched investigations into suspected manipulation of precious metals prices by banks.
Market sources said Standard Bank, in conjunction with ICBC, is in prime position to buy the Deutsche seat. "Standard Bank is a shoo-in for the fixing seat - they want it, and it would be acceptable to the other members," a senior gold market source told Reuters. "It's just whether they can agree a fee."
Originally sources had suggested that the deadline for a deal was the end of this year, but a deal is looking much closer now. "It's more thinking in terms of months rather than quarters," another market source said.
Both Standard Bank and Deutsche Bank declined to comment.
The last time a seat at the fix changed hands was in 2004, when N.M. Rothschild and Sons sold theirs to Barclays for a sum market sources put at $1 million.
Deutsche Bank's replacement at the fix is expected to be a market-making member of the LBMA - who quote two-way prices to each other for agreed minimum quantities of gold during the London business day. But that does not necessarily mean it will be a current market maker.
Standard Bank said last month it would sell a 60 percent stake in its London-based global markets unit to ICBC for $765 million.
"ICBC have wanted to be a market-making member of the LBMA for a while," said another senior gold market source, who saw the bank as having potential interest in the fixing seat.
ICBC has been steadily building its presence in the gold market since setting up its precious metals department in 2009, and has previously said it is specifically targeting expansion of its precious metals business outside China.
In 2011 it became a full member of the London Bullion Market Association (LBMA) - one of only two Chinese banks, along with Bank of China, to do so.
Some in the market question whether ICBC has sufficient trading capacity in the European time zone to become a market making member on its account. They suggest gaining market-making status through Standard Bank is more likely.
Standard Bank is already active in the platinum and palladium fix and is a market-making member of the London Platinum and Palladium Market (LPPM).
LBMA guidelines say a company seeking market-maker status needs to undergo a probationary period of around three months, during which time it must quote the current market makers.
At the end of this period, those market makers are polled to check they are satisfied with the applicant's service, and support the application. The management committee would normally expect all market makers to have agreed on the application before approving it, the LBMA said. (Additional reporting by Melanie Burton in Sidney; Editing by Veronica Brown and Mark Heinrich)