October 19, 2015 / 10:51 AM / in 3 years

China Construction Bank to join LBMA silver price-setting mechanism

LONDON (Reuters) - China Construction Bank (CCB) (601939.SS) will join the LMBA silver benchmark-setting process after signing a memorandum of understanding with CME Group (CME.O), the exchange operator said in a statement on Monday.

A man walks past a logo of China Construction Bank at the Pudong financial area in Shanghai, China, May 11, 2015. REUTERS/Aly Song

CME, in conjunction with Thomson Reuters (TRI.TO), parent of Reuters News, took over as operator of the London silver XAG= price benchmark last year, after the historic precious metals “fixes”, in use in some cases for more than a century, were replaced by electronic auctions.

CCB will join HSBC (HSBA.L), JPMorgan Chase (JPM.N), Mitsui & Co Precious Metals, Bank of Nova Scotia - ScotiaMocatta, Toronto Dominion Bank and UBS UBSG.VX in taking part in the daily auction process hosted by CME and Thomson Reuters.

CME’s Harriet Hunnable, group managing director of metals products, said on the sidelines of the London Bullion Market Association annual conference in Vienna on Monday she was pleased that the bank is joining the silver benchmark.

Chinese institutions are taking an increasing role in international precious metals markets. Bank of China in June became the first Chinese bank to join the gold price benchmark-setting process operated by Intercontinental Exchange (ICE).

China, the metal’s largest consumer and producer, is also aiming to become a global gold price XAU= setter in its own right by the end of 2015 with its yuan-denominated gold benchmark, which could challenge rivals’ effort to increase market share.

The Shanghai Gold Exchange launched an international platform last year that allowed foreign players to trade yuan-denominated gold contracts for the first time.

Reporting by Jan Harvey; Additional reporting by Clara Denina in Vienna; Editing by Veronica Brown and David Holmes

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