In July, the four banks that administer the platinum and palladium fixes announced that they would seek a third-party to take control of the benchmarks. Today it was announced that The London Metals Exchange, owned by Hong Kong Exchanges and Clearing LTD, would be the new administrators of the platinum and palladium fixes starting December 1st.
Recently the silver fix was reconfigured amid lawsuits alleging illegal manipulation which led to an industry-wide call for a revamping of all of the precious metals fixes.
For over 100 years, the prices of silver and gold were locked-in or “fixed” during a secretive twice-daily conference call between banks but the new silver benchmark will be set by an electronic auction-based system administered by CME and Thomson-Reuters. A new administrator for the gold fix will be announced later this year.
The current system of platinum and palladium benchmarks has been in place since 1989.
The new system, called LMEbullion will be an electronic version of the existing process. The platinum and palladium prices will have auctions where the initial price is set and then the participants will take turns expressing their interest. The banks will also have the ability to pause the process for recalculation as needed.
LME is also hoping to use its newly developed system to administer the gold fix and have bid to also administer gold pricing. At least 14 other banks are also in the running and a shortlist of contenders is expected to be published tomorrow by the LBMA. The Hong Kong-owned LME may allow China to gain more influence over market pricing.
The various precious metals fixes have been under close examination recently after lawsuits were filed by two economists in New York City claiming that the pricing was being illegally manipulated.