‘Anti-Arb Compliance’ Sinks London Silver ‘Fix’ 6% to 7-Year Low, Spot Rallies Straight Back

28-Jan (BullionVault) — Silver prices sank almost over 80 cents at Thursday lunchtime’s London benchmarking, hitting the lowest level in 7 years – while gold prices and Comex silver futures contracts held almost unchanged near multi-month highs – thanks to what some traders called the unintended consequences of regulatory compliance by banks and brokerages.

Modelled on the century-old ‘London Fix’ which it replaced in 2014 – and which offered a moment of unlimited liquidity to would-be buyers and sellers – the LBMA Silver Price became a formally regulated benchmark under UK law last April.

With spot bullion for London delivery quoted around $14.41 – only 1.1% below yesterday’s new 7-week highs – the 12 noon benchmarking auction saw what participants called “heavy selling”, with lower suggested prices failing to elicit stronger demand to balance it.

The silver price suggested by exchange group the CME’s electronic algorithm was then cut ever lower before suddenly finding enough demand to balance the selling at the lowest price since 30 July 2009.

Dealers blamed Thursday’s action on rules – decided by the compliance departments of banks and brokerages, and aimed at meeting the new regulatory regime – which block traders participating in the benchmark auction from “arbitrage” in other silver markets at the same time.


PG View
: Really? There was no demand ahead of $13.85? This doesn’t pass the smell test . . .

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