* WGC round table attended by 34 delegates
* Enhanced transparency seen as key requirement for reformed
* Focus on separation between administration and
LONDON, July 7 Gold producers and consumers are
resistant to a wholesale redesign of the existing price setting
benchmark known as the "fix" despite increasing regulatory
glare, a discussion held by the World Gold Council found on
The debate hosted by the gold mining industry group was
attended by 34 delegates from investment funds, refiners,
exchanges, and other industry bodies.
The four banks that currently set the globally used gold
benchmark twice a day via a conference call - Barclays Plc
, HSBC, Bank of Nova Scotia and
Societe Generale - were not present, but the WGC said
it had had meetings with them separately.
"There was no real view from anyone in the room that the
gold fix should be abandoned and we should start redesigning it
from scratch," WGC managing director Natalie Dempster told
"There was a very clear consensus that users want reform not
The WGC said delegates agreed on the importance of expanding
involvement in the process to reflect the full range of market
participants, as well as on the need for a transparent benchmark
that mitigates reputational risks.
Current administrator the London Gold Market Fixing Limited
represents the four price-setting banks, with no effective
separation between administration and participation, WGC said.
The forum comes as gold and silver fixes, along with other
commodity benchmarks, face increased scrutiny by regulators in
Europe and the United States following the London Interbank
Offered Rate (Libor) manipulation case in 2012.
Many aspects of the existing process, however, are viewed
favourably by market participants, although some other are in
need of reform to be compliant to the 19 principles on financial
benchmarks outlined in July 2013 by the International
Organisation of Securities Commissions (IOSCO), an umbrella body
of market regulators.
IOSCO has set July 2014 as the deadline for benchmarks'
administrators to say whether they will comply to the
The discussions are separate to the London Bullion Market
Association's (LBMA) process aimed at finding a replacement for
daily silver pricing, which will be disbanded in August.
Members of the association, which count gold and silver
fixing banks Bank of Nova Scotia and HSBC Bank and other large
bullion-trading banks, discussed seven different proposals from
bidders including the London Metal Exchange (LME) and the
Chicago Mercantile Exchange (CME) at a meeting on Friday.
The winner is expected to be announced in the next two days,
sources said, as members are still undecided between three
"There are still a lot of unanswered questions that the LBMA
needs answers for from the (bidders) that are at the top of that
list ...and they need to meet with regulators," a source close
to the association said.
An electronic solution to the silver fix could be applied to
price-setting for gold and platinum group metals, sources said.
But the WGC said that would not necessarily be the case.
"We simply seek to convene a debate on the issue ... the
gold and silver markets are very different, and it is not
necessarily the case that the solution found to replace the
silver fix is then applied to gold at all," Dempster told
Reuters in a previous interview.
She added the group will meet with the LBMA on Thursday and
will also "engage with the members and some other players."
"In the next couple of weeks we will be listening to
everyone's views and preferences and then we will come up with a
policy position on what we think a reformed system should be."
Answering lawmakers' questions on the trustworthiness of the
gold market, a senior official at Britain regulator Financial
Conduct said last week that collusion among banks in setting the
gold price benchmark was possible but there was no evidence of
The FCA in May fined Barclays 26 million pounds for failures
in internal controls that allowed a trader to manipulate the
setting of gold prices, just a day after the bank was fined for
rigging Libor interest rates in 2012.
(Reporting by Clara Denina. Editing by David Evans)