The move to make changes the fix comes on the back of growing scrutiny on commodity markets by financial regulators interested in making the process a great deal more transparent.
According to the London Bullion Market Association, The new electronic auction process is intended to increase transparency as well as the potential number of direct market participants.
The auction process will be operated jointly by the Chicago Mercantile Exchange and Thompson Reuters, and the results will be published on the LBMA website.
But, while the number of participants in the fix is expected to grow over time, the tight schedules involved in moving from one to the other has meant that some potential players are not yet involved.
In a press release issued on Friday morning, the LBMA said: “Given the strong market engagement in the live testing and accreditation process, the LBMA fully expects the list of price participants will grow over the coming weeks as more participants meet the formal requirements to participate in the LBMA Silver Price. These participants include banks, trading houses, refiners and producers.”
According to Sharps Pixley CEO, Ross Norman, the process is unlikely to go down as the most elegant, but he does expect the number of participants to increase.
However, he is more sceptical about whether or not the process does much yet to increase the transparency of the fix.
“The auction is only available live through two news wires at present, for a fairly significant fee. Which to, my mind doesn’t make it that much more transparent, I think it should be open to everyone,” he said.
Another important factor, Norman, said is that the process must allow one to unbake the cake. Regulators must be able to see who the participants are, they need to see who put the price in.”
“Making it electronic moves us in that direction, but there is a way to go still,” he said.
According to the LBMA, three firms had been accredited in time to contribute to Friday's silver price: HSBC Bank USA NA, Mitsui & Co Precious Metals Inc and The Bank of Nova Scotia – ScotiaMocatta.
