Where’s the silver lining? Metals market airs concerns over global benchmark process

29-Jan (Platts) — Regulation. Regulation. Regulation. Once again it is being blamed for the London Bullion Market Association Silver Price — operated and administrated by CME Group and Thomson/Reuters — settling around 6% below the spot price January 28. A matter of some contention across the market.

The jury is well and truly out on whether or not it is the fault of the system, or just another headache embedded by over-regulation.

The LBMA Silver Price settled January 28 at $13.58/oz. When the daily auction process kicked off the spot price was $14.42/oz.

Questions were raised about the process across the metals market January 6, after it took 60 attempts to settle.

One trader said January 28 that he would point the finger of blame at over-regulation of the market.

“I would not say it’s anything technical — the auction was functioning as programmed,” he said. “I’d say it’s definitely to do with regulations and supervision.”

…The official line from the CME was:

“The LBMA Silver Price is established through a transparent electronic auction mechanism designed to adjust the price until there is equilibrium between buy and sell orders. Given the orders placed in the auction today by five participants, the buy and sell orders became balanced after 29 rounds and the LBMA Silver price was established at a price of $13.58.”

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