LONDON — The gold market Friday marched into the 21st century with the launch of a new electronic platform designed to make the daily market price benchmark less vulnerable to manipulation.
But efforts to fix the fix have been partly hobbled by the complex rules that made it difficult for some banks to join in time for the launch, according to a senior executive at the firm that will run the gold-pricing process, which is called the LBMA Gold Price.
Nervousness about the new rules, as well as a law in the U.K. that makes manipulating benchmarks a criminal offense, has made some banks reluctant to participate right away, said Finbarr Hutcheson, president of ICE Benchmark Administration Limited, the unit of Intercontinental Exchange Inc., which will manage the new pricing mechanism.
At some banks, “it’s very hard to satisfy senior management that the rules are very well understood,” he said.
Still, the four banks that previously participated in the gold-price setting process — Bank of Nova Scotia, Barclays Bank PLC, HSBC Holdings PLC and Société Générale SA — have agreed to stay in the new gold fix, which is based on an electronic auction. UBS AG and Goldman Sachs Group Inc. joined Friday.
“That shows a real commitment on their part to making this market,” said Adrian Ash, head of research at BullionVault, a U.K.-based online marketplace for gold and silver investors. “Six is great; more would be better.”
