* LBMA, SBMA, ICE to study extending LBMA gold pricing in
* When in place, will allow timely tracking of Asian demand
(Adds quote, background)
By Manolo Serapio Jr
SINGAPORE, Oct 17 Singapore will study the
possibility of bringing the gold benchmark pricing in London to
users in Asia, in a move that would also allow market
participants in the world's top consuming region to help set the
price of bullion.
Home to the world's biggest buyers China and India, Asia's
importance has been on the rise as the key source of demand for
gold, but bullion traders in the region are often exposed to
intraday price volatility and overnight foreign exchange risks
with benchmark prices currently being set out of London.
The Singapore Bullion Market Association, London Bullion
Market Association and Intercontinental Exchange
Benchmark Administration (IBA) will launch a joint feasibility
study on the development of "LBMA pre-AM gold price at 2 pm
Singapore time", Lim Hng Kiang, minister for trade and industry
and deputy chairman of the Monetary Authority of Singapore, told
an industry conference on Monday.
The study "is an important first step towards establishing a
U.S. dollar price discovery mechanism for gold during Asian
business hours," said Lim. "When in place, it will facilitate
the timely tracking of Asian demand and allow participants in
Asia to settle their trades within the same business day."
Singapore in January 2014 dropped plans to set a daily
reference price for gold shortly after European regulators
investigated manipulation of precious metals prices by banks.
In October that year, the Singapore Exchange launched a
25-kg wholesale gold contract targeting to create a regional
benchmark, but the contract has failed to attract volumes, with
zero activity in some months.
"We hope to make a reputable gold benchmark mechanism in
London available to Asian users," the Singapore Bullion Market
Association's chief executive, Albert Cheng, told Reuters.
Cheng said the feasibility study will be done until year
end. "If there's enough interest, the IBA will consider
launching it early next year," he said.
China launched a yuan-denominated gold benchmark in April
this year in a bid to exert more control over pricing of the
metal, but use of the benchmark even in China has yet to gain
traction, traders say, many of whom still follow the
dollar-denominated London pricing.
The London gold fix, previously set via a teleconference
among banks and facing allegations of manipulation, was replaced
in 2015 by electronic auctions, which take place twice daily.
The LBMA last week named Cinnober subsidiary Boat as the
service provider for its new trade reporting platform, as it
moves to boost transparency in the $5-trillion-a-year London
Transparency in the fixing process has come under scrutiny
since a scandal broke in 2012 over the rigging of the London
interbank offered rate, or Libor.
(Reporting by Manolo Serapio Jr., additional reporting by
Koustav Samanta; Editing by Himani Sarkar)