This consensus was reached during the LBMA’s market consultation, which involved two market surveys, a seminar and meetings with market participants, solution providers and the regulator. IBA, an independent specialist benchmark administrator, will provide the price platform, methodology as well as the overall administration and governance for the LBMA Gold Price. IBA’s proposal meets the LBMA Request for Proposal process criteria as it is electronic, auction-based, tradeable and auditable. The gold price mechanism is also expected to attract an increased number of direct participants.
Ruth Crowell, Chief Executive of the LBMA commented
“I’m delighted to announce an administrator in time to allow the market to move forward from consultation into timely implementation. The LBMA is grateful for all the support, comments and feedback it has received from all market participants. While we know that it is subject to internal compliance approvals, we are pleased to have eleven entities intending to be Phase One Participants.”
IBA scored the highest marks on the “Enhanced Scorecard” within the LBMA’s Market Survey, which asked market participants to rank each entity based on Independence, Platform, Technology, Benchmark Price Mechanism, Short-term/Long-term Costs, Regulatory Capabilities & FX options. IBA achieved the highest overall score as well as the highest score in the most critical categories: Regulatory Capabilities, Independence, Platform and Benchmark Price Mechanism.
Feedback from the surveys, the seminar together with the direct consultations by the LBMA Executive with the proposers and market participants were presented directly to a meeting of the LBMA Data Working Group which is made up of representatives from the LBMA’s various Committees (Management Committee, Market Makers and Regulatory Affairs Committee). Phase One Price Participants were also involved, as well as observers from the World Gold Council.
The LBMA will develop a process of accreditation for gold price participants. In the meantime the LBMA will work closely with IBA to prepare the LBMA Gold Price mechanism for the start of live testing, which is expected to go live in Q1 2015.