ICE to scrap LBMA gold price seller’s premium

July 16, 2015 Posted by admin

ICE Benchmark Administration, which runs daily gold price-setting auctions used by mining companies to central banks, will remove a seller’s premium from next year.

Following a market consultation, IBA will on Jan. 1 remove the 15 cents-an-ounce premium that’s added to the settled rate in the twice-daily LBMA Gold Price, it said in a statement Tuesday. It also said that if fewer than three direct participants are available to start an auction, it would publish a benchmark price without conducting the procedure.

IBA in March started administering the electronic auction that replaced the century-old London gold fixing, a ritual that had been taking place by phone. There are now 10 companies allowed to be direct auction participants, including Bank of China Ltd., which joined last month.

“All trades in the auction will be settled at the benchmark price, though clients are free to bilaterally agree the charging structure for their services,” IBA said in the statement. The seller’s premium is thought to have been a way to encourage producers to sell through the London market, it said.

IBA said it will continue to also publish settlement prices in euros and pounds.

©2015 Bloomberg News

Article source: http://www.mineweb.com/news/gold/ice-to-scrap-lbma-gold-price-sellers-premium/

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