The famous five banks of Barclays, Deutsche, Nova Scotia, HSBC and Soc Gen have formed a steering committee and are looking at ways to change how the 1919 gold fix is run. Deutsche has announced that it will pull out from the fixing club after saying they will be reducing their commodities business
Right now the process is thus;
On conference calls at 10:30 a.m. and 3 p.m. London time, firms declare how many bars of gold they want to buy or sell at the current spot price, based on orders from clients as well as their own account. The price is increased or reduced until the buy and sell amounts are within 50 bars, or about 620 kilograms, of each other, at which point the fixing is agreed on. Traders relay shifts in supply and demand to clients during the calls and take fresh orders to buy or sell as the price changes, according to the website ofLondon Gold Market Fixing Ltd, where results are published.
The banks have asked external companies to advise on the matter.
Gold is just one of a number of markets being investigated for fixing procedures and possible market manipulation, with Deutsche being called up by regulators to explain certain events and practices.
Full story from Bloomers here.
