Tag Archives: Silver Price

Death Spiral for the LBMA Gold and Silver auctions?

In a bizarre series of events that have had limited coverage but which are sure to have far-reaching consequences for benchmark pricing in the precious metals markets, the LBMA Gold Price and LBMA Silver Price auctions both experienced embarrassing trading glitches over consecutive trading days on Monday 10 April and Tuesday 11 April. At the outset, its worth remembering that both of these London-based benchmarks are Regulated Benchmarks, regulated by the UK’s Financial Conduct Authority (FCA).

In both cases, the trading glitches had real impact on the benchmark prices being derived in the respective auctions, with the auction prices deviating noticeably from the respective spot prices during the auctions. It’s also worth remembering that the LBMA Gold Price and LBMA Silver Price reference prices that are ‘discovered’ each day in the daily auctions are used to value everything from gold-backed and silver-backed Exchange Traded Funds (ETFs) to precious metals interest rate swaps, and are also used widely as reference prices by thousands of precious metals market participants, such as wholesalers, refineries, and bullion retailers, to value their own bi-lateral transactions.

Although the gold and silver auctions are separately administered, they both suffer from limited direct participation due to the LBMA only authorising a handful of banks to directly take part. Only 7 banks are allowed to participate directly in the Silver auction while the gold auction is only currently open to 14 entities, all of which are banks. Limited participation can in theory cause a lack of trading liquidity. Added to the mix, a central clearing option was introduced to the LBMA Gold Price auction on Monday 10 April, a day before Tuesday’s gold auction screw-up. The introduction of this central clearing process change saw four of the direct participants suspended from the auction since they had not made the necessary system changes in time to process central clearing. This in itself could have caused a drop in liquidity within Tuesday’s gold auction as it reduced the number of possible participants.

Other theories have been put forward to explain the price divergences, such as the banks being unwilling to hedge or arbitrage auction trades due to the advent of more stringent regulatory changes to prevent price manipulation. While this may sound logical in theory, no one, as far as I know, has presented empirical trade evidence to back up this theory. There is also the possibility of deliberate price manipulation of the auction prices by a participant(s) or their clients, a scenario that needs to be addressed and either ruled out or confirmed.

ICE Benchmark Administration (IBA), the administrator of the LBMA Gold Price, also introduced a price calculation Algorithm into the gold auction in mid-March 2017, a change which should also be considered by those seeking to find a valid explanation for the gold auction price divergence where the opening price kept falling through multiple auctions rounds whilst the spot price remained far higher. Could the algorithm have screwed up on 11 April?

Whatever the explanations for the price divergences, these incidents again raise the question as to whether these particular precious metals auctions are fit for purpose, and why they were designed (and allowed to be designed) at the outset to explicitly block direct participation by nearly every precious metals trading entity on the planet except for a limited number of London-based bullion bank members of the LBMA.

LBMA Silver Price fiasco

First up, on Monday 10 April,  buried at the end of a Reuters News precious metals market daily news wrap was a very brief snippet of news referring to an incident which dogged the LBMA Silver Price during Monday’s daily auction (an auction which starts at midday London time). According to Reuters:

“silver prices slipped after the LBMA silver price benchmark auction was paused for 17 minutes after a circuit breaker was triggered when the auction price moved outside of the spot range, the CME said in a statement.”

What exactly the CME meant is unclear because whatever statement Reuters was referring to has not been released on the CME Group website or elsewhere, and Reuters did not write a separate news article about the incident.

To recap, the LBMA Silver Price is administered by Thomson Reuters on a calculation platform run by the CME Group, and operated on a contract basis on behalf of the London Bullion Market Association (LBMA). However, there is nothing anywhere on the CME’s LBMA Silver Price web page, or on the Thomson Reuters LBMA Silver Price web page, or on the LBMA website, in the form of a statement, comment or otherwise, referring to this ‘circuit breaker’ that persisted for ’17 minutes’ in the LBMA Silver Price auction during which time the ‘auction price moved outside of the spot range

On its calculation platform, CME makes use of a pricing algorithm to automatically calculate a price for each round of the LBMA Silver Price auction (excluding the first auction round). From page 8 of its LBMA Silver Price Methodology Guide:

“3.7 Starting Price

The initial auction price value is determined by the auction platform operator by comparing multiple Market Data sources prior to the auction opening to form a consensus price based on the individual sources of Market Data. The auction platform operator enters the initial auction price before the first round of the auction begins….”

“3.4 End of Round Comparison

If the difference between the total buy and sell quantity is greater than the tolerance value, the auction platform determines that the auction is not balanced, automatically cancels orders entered in the auction round by all participants, calculates a new price, and starts a new round with the new price.”

There is also a manual price override facility which can be invoked if needed:

3.8 Manual Price Override

In exceptional circumstances, CME Benchmark Europe Ltd can overrule the automated new price of the next auction round in cases when more significant or finer changes are required. When doing so, the auction platform operator will refer to a composition of live Market Data sources while the auction is in progress.”

As to why the “auction platform operator” did not invoke these manual override powers and seek market data sources during the time in which the silver auction was ‘stuck’ for 17 minutes is unclear. A 17 minute pause would presumably be, in the CME’s words, ‘exceptional circumstances’.

Unfortunately, neither the CME website, the Thomson Reuters website, or the LBMA website provides intra-round pricing data for the LBMA Silver Price, so anyone who doesn’t have a subscription to the live data of the auction is well and truly left in the dark as to what actually happened on Monday 10 April. Unlike the LBMA Gold Price auction which at least provides an ‘Auction Transparency Report’ for each auction (see below), the LBMA Silver Price auction is sorely lacking in any public transparency whatsoever.

But what is clear from the Reuters information snippet is that the LBMA Silver Price auction on Monday 10 April suffered a serious trading glitch, that saw the prices that were being formed in the auction deviate from where the silver spot price was trading during that time. This price deviation suggests a lack of trading liquidity in the auction and/or an inability of the participants to hedge their trades in other trading venues. As to whether the final LBMA Silver Price that was derived and published as the daily benchmark price on 10 March was outside the spot range (and above or below spot) is not mentioned in the Reuters report.

The complete opacity about this incident is concerning but not really surprising since nearly everything in the London precious metals markets is shrouded in secrecy, and corporate communication in this area is truly abysmal.

Recalling that Thomson Reuters and CME announced in early March that they are abruptly pulling out of the contract for administrating and calculating the LBMA Silver Price, this latest fiasco is unwelcome news for the LBMA – CME – Thomson Reuters triumvirate, and raises further questions for the FCA as to whether this Silver auction and benchmark should even be allowed to continue in its present or similar form.


LBMA Gold Price fiasco

Turning to the London gold auction, on the afternoon of Tuesday 11 April, the LBMA Gold Price auction (which starts at 3:00pm London time) experienced what can only be described as a shocking and serious trading fiasco which has real world consequences for all trading entities that use the LBMA Gold Price Benchmark reference price (and there are many that do so). As a reminder, ICE benchmark Administration (IBA) administers the daily LBMA Gold Price auctions on behalf of the LBMA.

Again it was Reuters that broke the gold auction news. In a short article titled ‘London gold benchmark fixes $12/oz off spot price‘, Reuters said the following:

London’s gold price benchmark fixed some $12 below the spot price on Tuesday afternoon as the auction appeared to become locked in a downward spiral. From an initial $1,265.75, close to the spot price at the time, the auction price ratcheted steadily lower before fixing at $1,252.90 in the ninth round. From the fifth round to the eighth the bid and offer volumes remained frozen, unable to match.

This came a day after ICE introduced clearing for the LBMA Gold Price auction”

Reuters concludes its article by noting that the ICE clearing was introduced:“before several participating banks had the necessary systems in place.”

“As a result, China Construction Bank, Societe Generale, Standard Chartered and UBS  are yet to confirm a date for their participation in the cleared auction.. ICE declined to comment. The LBMA, which owns the intellectual property rights to the auction, was not immediately available to comment.”

This forced reduction in the number of participants in the auction seems to be relevant to the issue and therefore requires further scrutiny.

ICE Central Clearing – Foisted on the LBMA Gold Price auction?

In mid-October 2016 during the LBMA precious metals conference in Singapore, ICE Benchmark Administration announced that it would introduce central clearing into the London Gold Price by utilizing a series of daily futures contracts which it planned to launch in February 2017. The introduction of central clearing into the auction was initially planned for March 2017.

The LBMA Gold Price Oversight Committee meeting minutes for 4 November 2016 specify the March 2017 launch date and make clear that all banks ‘wanted to move‘ to use the clearing route, and that ICE Benchmark Administration ‘wish to keep running a healthy auction‘ (whatever that means). The minutes stated:

“IBA gave a central clearing update to the Committee, notifying them that the cleared instrument would be launched in January 2017 and the auction trades could be routed there from March 2017. The Committee were informed that IBA had spoken to every bank and every bank wanted to move. Discussion moved to the technical implications for this new model and IBA’s primary wish to keep running a healthy auction.”

Up until at least the end of February, ICE’s LBMA Gold Price page stated the following:

From March 2017, subject to regulatory review, centrally cleared settlement will be available for transactions which originate from IBA’s gold auction underlying the LBMA Gold Price.

This will give firms the choice of settling their trades bilaterally against each counterparty (as they currently do), or submitting their trades to clearing and settling versus the clearing house. This mechanism removes the requirement for firms to have bilateral credit lines in place with all of the other Direct Participants in the auction.

Central clearing opens the auction to a broader cross-section of the market. It also facilitates greater volume in the auction.

By the end of March 2017, the above statement had been altered from March 2017 to “Q2 2017″ with ICE pushing back the launch date for the introduction of central clearing:

From Q2 2017, subject to regulatory review, centrally cleared settlement will be available for transactions which originate from IBAs gold auction underlying the LBMA Gold Price….”

Reuters again covered these ICE clearing delays in a series of articles during March, highlighting the fact that 4 of the 13 banks that are direct participants in the LBMA Gold Price auction were not ready for the introduction of central clearing due to delays in making unspecified changes to their internal IT systems that would allow such central clearing processing. So anybody who had been reading these Reuters articles would have been aware that there were risks on the horizon in terms of some of the LBMA Gold Price auction participants being slow in being ready for the changes.

In a 15 March article titled ‘London gold rush - ICE to launch clearing before banks are ready‘, Reuters said that ICE would introduce central clearing to the auction on 3 April and that:

“U.S.-based exchange operator ICE has already pushed back the launch of its service by several weeks to allow the banks and brokers who participate in the auction to adapt their IT systems, four sources with direct knowledge of the matter told Reuters.”

 “Sources at many participant banks said that they were unhappy with the speed at which ICE was seeking to introduce clearing, which require investment in IT processes and back office systems and raise complex compliance issues.

 “However, at least four of the 14 banks and brokers who participate in the LBMA Gold Price auction will still not be ready to use the new system

Banks that are not ready would be suspended from the auction until they have the necessary IT infrastructure in place or would have to participate through other players who could clear deals, according to the sources. 

ICE’s readiness to provoke such disruption illustrates how much it wants to avoid further delays that could torpedo its ambitions to become the dominant exchange in London’s vast bullion market, market sources said”

Reuters picked up this theme again on 21 March with an article titled “ICE delays launch of clearing for London gold benchmark: sources“, in which it said that the 3 April start date had again been pushed back and that:

“two sources told Reuters that ICE had again delayed and there was now no set start date.”

“Sources earlier told Reuters that Societe Generale, Standard Chartered, ICBC Standard Bank and China Construction Bank would not be ready to clear the LBMA auction in time for April 3.”

Again interestingly, ICE’s desire to promote its own gold futures contracts was seen as a primary driver for trying to rush through the introduction of central clearing for the gold auction, as doing so would add volume to ICE’s daily gold futures contracts:

“market sources say ICE plans to use clearing of the LBMA Gold Price auction, which it administers, to funnel business to its contracts and give it a head start over rivals.”

As a reminder, ICE and CME have both recently launched gold futures contracts connected to the London market, and the London Metal Exchange (LME) plans to launch its own suite of London gold futures contracts in early June.

Central clearing uses exchange for physical (EFP) transactions in the daily futures contracts which are then cleared at ICE Clear US. The futures have daily settlement each day between 3:00 pm and 3:05 pm London time. But how the whole process ties together is still quite puzzling. An email to the IBA CEO asking for details of how the futures are linked to the auction went unanswered.

Both the ICE and CME contracts had a damp squib start, experiencing weeks of zero trading volumes. See BullionStar article from 8 February 2017 titled “Lukewarm start for new London Gold Futures Contracts”.

On 30 March, Bloomberg announced on Twitter that central clearing in the LBMA Gold Price auction would start on Monday 10 April.


Downward Spiral

So what was this downward spiral that the LBMA Gold Price auction experienced on the afternoon of Tuesday 11 April when it became, in the words of Reuters, locked in a downward spiral?

Let’s look at the ICE Auction Transparency Reports for the few days before and during the 11 April afternoon fiasco. These reports show the number of auction rounds, the number of participants,and the bid and offer volumes for each round as well as the price at the end of each round.

Fourteen entities are now authorized to be direct participants in the LBMA Gold Price auction, 13 of which are banks, the other being new participant INTL FCStone since early April. INTL FCStone is a financial services company that has a slant towards commodities. The 13 banks are:

  • Bank of China
  • Bank of Communications
  • China Construction Bank
  • Industrial and Commercial Bank of China (ICBC)
  • Goldman Sachs
  • HSBC Bank USA
  • JPMorgan Chase Bank (London Branch)
  • Morgan Stanley
  • Société Générale
  • Standard Chartered
  • The Bank of Nova Scotia – ScotiaMocatta
  • Toronto-Dominion Bank
  • UBS

Unlike the old London Gold Fixing which had 5 member banks that were obliged to always turn up (and since 2004 dial in) for every auction, this LBMA Gold Price auction does not require all the authorized participants to dial-in. Most of the time, far fewer than the full contingent turn up. For example on Friday 7 April, 8 banks turned up at the morning auction while only 7 banks turned up at the afternoon auction (i.e only a 50% turnout). However, Friday 7 April is also relevant since that was the last day before ICE introduced central clearing to the gold auction.

7 April AM
LBMA Gold Price auction – 7 April – morning – click to enlarge
7 april PM
LBMA Gold Price auction – 7 April – afternoon – click to enlarge

Fast forwarding to the morning gold auction on Monday 10 April when ICE first introduced central clearing, you can see from the below auction report that only 5 banks participated. This is the same small number that took part in the former London Gold Fixing which was run by the infamous and scandal ridden London Gold Market Fixing Limited and which consisted of Deutsche Bank, Barclays, HSBC, Scotiabank and Société Générale.

The reason the turnouts after the introduction of central clearing are so low is that 4 of the direct participant banks have been excluded from the auction due to not being ready to implement central clearing  – a fact predicted by Reuters News in March. This means that the usual number of between 7-10 banks participating in the auction has now been reduced by 4, as four banks cannot take part. As Reuters said on 21 March “Banks that are not ready would be suspended from the auction until they have the necessary IT infrastructure in place”.

The irony of this debacle is that the participating banks all already have bilateral credit limits with each other and so don’t need to do central clearing in the auction. Only new /future direct participants which do not have bilateral credit lines technically need to utilize the clearing solution.

Central clearing is supposed to make it easier for a far wider range and number of participants to take part. But if this entails enhancements to IT systems that some of the most sophisticated investment banks on the planet are struggling with, what hope is there for other precious metals trading entities to participate.

But some reason – probably to try to kickstart the trading volume in its daily gold futures contracts – ICE has made it mandatory for all existing direct participants (the bullion banks) to open clearing accounts and get their IT systems in shape to use clearing.

The ICE website now states:

“Central clearing  for the auction is enabled by effecting  Exchange for Physical (“EFP”) transactions into the new physically settled, loco London gold daily futures contract which is traded on ICE Futures U.S. The EFPs establish positions in the futures contract which are cleared and can be physically delivered at ICE Clear U.S

and Direct participants (DPs) “must establish a clearing account with an ICE Clear U.S. Clearing member” so as to be able to use this account to clear auction trades.

However, “DPs may still maintain credit lines to settle bilaterally against other DPs” and “DPs can elect, for each counterparty, to clear or settle their auction transactions bilaterally.” If this is so, then why the need to force these banks to open a clearing account and push through complex IT changes?

The ICE LBMA Gold Price web page now includes a double asterisk next to the names of the culprit banks that are not ready for central clearing. These banks are China Construction Bank, Société Générale, Standard Chartered, and UBS. the double asterisk states that “** Date of participating in the cleared auction to be determined.

So now, more than 2 years after the LBMA Gold Price has been introduced, we are back to a situation where only 5 large bullion banks are participating in a daily gold price auction, an auction which has huge ramifications for the reference pricing of gold across myriad gold markets around the world.

Both of the auctions on 10 April finished within the first round, with buy volume and sell volume in balance, so there was no need for subsequent auction rounds.

10 April AM
LBMA Gold Price auction – 10 April – morning – click to enlarge
10 April PM
LBMA Gold Price auction – 10 April – afternoon – click to enlarge

Turning to the morning auction of Tuesday 11 April, only a measly 4 banks took part in the first round of the auction, and 5 participants took part in rounds 2 and 3. The bid and ask volumes were not that much out of balance, and the auction finished after 3 rounds.

11 April AM
LBMA Gold Price auction – 11 April – morning

Turning to the afternoon auction of 11 April, the price action commentary provided by Reuters was as follows:

from an initial $1,265.75, close to the spot price at the time, the auction price ratcheted steadily lower before fixing at $1,252.90 in the ninth round. From the fifth round to the eighth the bid and offer volumes remained frozen, unable to match.

Below you can see visually see what happened round by round from the first round price of $1,265.75 where there was zero bid volume and 125,217 ozs (nearly 4 tonnes) of ask volume, through the fifth to (actually) the ninth rounds where bid volume was an unchanging 92,873 ozs and ask volume was an unchanging 107,090 ozs, but still the price fell from $1,260.50 to fix in round 9 at $1,252.90, i,e, the price fell $7.60 in 2 minutes while the volumes didn’t budge. And most critically, the fixing price was $1252.90 while the spot price was trading at $1267 at that time.

LBMA Gold Price auction - afternoon 11 April 2017
LBMA Gold Price auction – 11 March afternoon – Click to enlarge

As Kitco News said in its coverage of the LBMA Gold Price fiasco:

“the benchmark ended up being set almost $15 dollars below where spot prices were trading at the time. The PM Gold Price showed a benchmark at $1,252.90 an ounce; however at the time, spot gold prices were trading around $1,267 an ounce, with prices heading towards a new five-month high.”

How could this happen? How could the auction price diverge so much from the spot price at that time and how could the auction go through round after round lowering the price while the bid and ask volumes did not change and while the spot price was actually far higher than any of the prices in the auction?

Kitco’s explanation, which is mostly based on the view of one person, Jeff Christian of the CPM Group, put the problem down to “poorly conceived regulations and a faulty price discovery mechanism“, i.e. a lack of liquidity due to banks being scared off by tightening regulations, and that this “sharp reduction in liquidity during the auction process” is causing “a large discrepancy in prices“. Christian also said that “because of regulations, banks and other financial institutions are backing away from becoming market makers.

But this reasoning of backing away due to regulations is not backed up by the facts for the simple reason that banks have continued to join the LBMA Gold Price auction at a rapid rate over the last 2 years, i.e. there is a trend of ever more banks applying to be authorized to participate in the auction. For example, since the auction was launched on 20 March 2015 with 6 banks, 9 more banks have signed up JP Morgan, Morgan Stanley, Standard Chartered, Bank of China, ICBC, China Construction Bank, Bank of Communications, Toronto Dominion Bank, and INTL FCStone. Note that Barclays was one of the original six banks in the auction but dropped out after it downscaled its the precious metals business in London. There are also the same number of LBMA Market Makers now as there were two years ago, in both cases 13 LBMA Market Makers.

Kitco’s article also fails to mention the central clearing implementation fiasco brought about by ICE’s rush to channel activity into its gold futures contracts and Kitco even fails to realize that 4 banks were suspended from the auction due to this central clearing issue.

daily AUD gold futures ICE 11 April
ICE Daily Gold Futures report for 11 April – See Volume and Open Interest – Click to Enlarge

Another factor relevant to the screwed up afternoon auction on 11 April that should be considered is the fact that in mid-March 2017, ICE Benchmark Administration introduced a price algorithm into the LBMA Gold Price auction. This fact has been totally ignored by the financial media.

From a human Chairperson to an automated Algorithm

Up until mid March 2017, the LBMA Gold Price auction used a human ‘independent chairperson’ to choose the opening price in the auction and also the auction price in each subsequent round. The identities of these independent chairpersons have never been divulged by ICE nor the LBMA.

Critically, sometime during the 3rd week of March 2017, ICE Benchmark Administration (IBA) introduced a pricing algorithm into the LBMA Gold Price auction. This change in procedure (moving from an auction chairperson to an auction pricing algorithm) was not actively highlighted by either ICE or the LBMA but is clear from looking at Internet Archive imprints of the ICE LBMA Gold Price webpage.

In an imprint of the LBMA Gold Price webpage from 9 March 2017, the methodology section states that:

“The auction process has an independent chairperson, appointed by IBA to determine the price for each round and ensure that the price responds appropriately to market conditions.”

See screenshot below for the same statement –  taken from the same webpage:

methodology 9 march 2017
LBMA Gold Price webpage – Methodology section 9 March 2017

Bullet point 1 of the Auction Process for the 9 March version of the webpage also refers to the chairperson as being responsible for setting the starting price and the price of each subsequent round “in line with current market conditions and the activity in the auction.

process 9 march 2017
LBMA Gold Price webpage – 9 March

But by 16 March, when the next imprint of the LBMA Gold Price page was made by the Internet Archive, the reference in the methodology section to an independent chairperson had been fully deleted, and bullet point 1 had been changed from mentioning a chairperson to discussing an algorithm, specifically changed to “IBA sets the starting price and the price for each round using an algorithm that takes into account current market conditions and the activity in the auction.

See screenshot below for the same statement –  taken from the same webpage:

process 16 march 2017
LBMA Gold Price webpage – 16 March

So if there is an algorithm that is taking into account current market conditions in addition to activity in the auction, why did this algorithm not take the current spot prices into account over rounds 4 – 9 of the LBMA Gold Price auction on the afternoon of Tuesday 11 April?

Furthermore, for such a major change to the methodology and auction process in an auction whose benchmark price is widely used in the gold world, it’s very surprising that neither ICE, nor the LBMA, nor the London financial media mentioned this substantial algorithmic change.

In early December 2016, ICE published an LBMA GOLD PRICE Methodology Consultation in which one of the consultation’s proposed changes was “the introduction of an algorithm to determine the price for each auction round“.

The December 2016 document noted that:

“IBA’s auction process is currently that the auction chair sets the price for each Round in line with current market conditions and the activity in the auction”

“IBA currently has a panel of auction chairs who are independent of any firm associated with the auction, including Direct Participants. The chairs are externally sourced but work with IBA to deliver a robust process for determination of the LBMA Gold Price.

The chairs use their extensive market experience to set the round prices based on a pricing framework agreed with IBA. IBA chose to operate the auction using human chairs to make sure that the price could respond appropriately to market conditions from the outset.

IBA’s feedback from the market was that, at least in the early stages, the professional judgement of a human chairman was needed.

“After operating the auction for more than a year, IBA started to develop an algorithm to set the auction’s starting price and subsequent round prices. IBA has now been testing and refining the algorithm over a number of months

As per the proposal, the algorithm would replace the human chair, after which:

Each auction will continue to be supervised by IBA’s analysts, and, if for any reason an auction did not progress as expected, IBA’s existing safeguards would be deployed to protect the integrity of the auction and the LBMA Gold Price benchmark

These safeguards were stated as being three, namely:

- Pause the auction and restart, to give Participants an opportunity to contact clients or re-evaluate their positions

- Increase the imbalance threshold, if it appears that the auction will otherwise not finish

- Cancel an order, if it is compromising the integrity of the process and the relevant participant cannot be reached. 

The proposals were pencilled in for implementation in Quarter 1, 2017.

Following the consultation, a “Methodology Consultation Feedback” document was published on the ICE Benchmark Administration website. One feedback respondent was concerned about who would be overseeing the daily auctions in the absence of a human chairperson, to which ICE answered:

“IBA can confirm that the auction will always be supervised by at least two IBA analysts. This approach is consistent with how we operate our other benchmarks.

Our aim is to put the auction on auto-pilot, not to make it driverless.

Unfortunately, from the wider gold market’s perspective, the LBMA Gold Price auction on the afternoon of Tuesday 11 April does indeed appear to have been ‘driverless‘ as it “did not progress as expected“, so it is now up to the LBMA and ICE to establish what the ‘IBA analysts’ were up to behind the driving wheel that day.

On its website, ICE states that the LBMA Gold Price methodology is “reviewed by the LBMA Gold Price Oversight Committee as documented in its Terms of Reference.” This Oversight Committee should also explain to the gold world what actually happened on the afternoon of 11 April.

Additionally, I find no explanation on ICE’s LBMA Gold Price webpage as to how exactly the automated algorithm works, what its logic rules are, how it was programmed etc.


The trading glitch with the LBMA Silver Price on Monday 10 April seems to have been completely missed by London’s financial media except for the brief reference by Reuters. The fact that there is no information on the CME, Thomson Reuters and LBMA websites about the issue should raise concern for users of this benchmark and for the UK’s regulator, the FCA. In an ideal world, there should be a full ‘outage’ report published on each of the 3 websites explaining what happened, but this will not happen in the shadowy and secretive London Silver Market.

Perhaps the auction price divergence in the LBMA Silver Price stems from a lack of liquidity brought on by the limited presence of auction participants, or due to the inability or unwillingness of participants to hedge or arbitrage their auction trades against the London OTC spot or other trading venues? The simple thing to do would be for CME, Thomson Reuters and the LBMA to explain themselves since this would minimize guesswork and to provide global silver market entities with clarity. Anything short of a full explanation by the parties concerned is irresponsible.

For the LBMA Gold Price auction, ICE Benchmark Administration needs to release a full ‘outage’ report and explanation on what exactly happened in the afternoon auction on 11 April and explain to the global gold market whether the introduction of central clearing was in any way responsible for the price divergence, and whether there are any conflicts of interest in trying to get banks to use its daily gold futures contracts. While they are at it, ICE should fully explain how the recent introduction of a pricing algorithm impacts the gold auction and whether this too had an impact on the auction price entering a downward spiral.

As the LBMA Silver Price and LBMA Gold Price are both Regulated Benchmarks, the FCA regulator needs to step up to the plate and for once show that it is on the side of the users of these benchmarks and not the powerful London banks.

Both of these auctions require full transparency and ease of direct participation by the full spectrum of the world’s gold and silver trading entities. Currently, they fall far short of these goals.

More Bad News for the LBMA Silver Price, but an Opportunity for Overhaul

On Friday 3 March 2017, in a surprise announcement with implications for the global silver market, the London Bullion Market Association (LBMA) informed its members that the current administrator and calculation agent of its recently launched LBMA Silver Price auction, Thomson Reuters and the CME Group respectively, will be pulling out of providing their services to the problematic London-based silver price benchmark within the near future. Thomson Reuters and the CME Group issued identical statements.

This is surprising because Thomson Reuters and the CME Group only began administering / calculating the LBMA Silver Price auction two and a half years ago in August 2014, when, amid much hubris, the duo were awarded the contract after a long-drawn-out and high-profile tender process. Notably, the Thomson Reuters  / CME contract with the LBMA was for a 5-year term running up to and into 2019. So the duo are now pulling out mid-way through a contract cycle.

More surprisingly, in their statements of 3 March, the LBMA / Thomson Reuters and CME allude to the European Benchmark Regulation being in some way responsible for the hasty departure. However, given that the units of CME and Thomson Reuters that are parties to the LBMA contract are their specialist benchmark units “CME Benchmark Europe Limited” and “Thomson Reuters Benchmark Services Limited”, which specialise in administering and calculating benchmarks, this excuse makes no sense.

In essence, this development is an embarrassment for all concerned and could lead to further reputational damage for the parties involved. It also now re-focuses market scrutiny on an area which the LBMA and its associates could well wish to forget, i.e. the former London silver fixing run by the infamous London Silver Market Fixing Limited, a company which itself is still one of the defendants, along with HSBC, Bank of Nova Scotia and Deutsche Bank, in a live New York class action suit that is scrutinizing the manipulation of the London silver price.

LBMA Silver Price: A Regulated Benchmark

Note that the LBMA Silver Price benchmark is now a “Regulated Benchmark” under United Kingdom HM Treasury Legislation, and is one of 8 financial market benchmarks regulated by the UK’s Financial Conduct Authority (FCA). So this is not some backwater obscure benchmark that we are talking about here. This is a benchmark with far-reaching effects on the global precious metals markets and a sister of the LBMA Gold Price benchmark. The reference prices from these benchmarks are used from everything from valuing Exchange Traded Funds (ETFs) to being the price reference points in ISDA swaps and bullion bank structured products such as barrier options.

According to the LBMA’s usual public relations mouthpiece Reuters, which relayed the news to the broader market on 3 March, the LBMA will be:

“looking to identify a new provider in the summer, and have the new platform up and running in the autumn”

This dramatic “exit stage right” by Thomson Reuters and the CME Group is a far cry from their initial and continued corporate spin of being committed to the silver price auction, which they claimed both at auction launch in August 2014, and also as recently as 2016 when they grovelled with promises of process improvement and wider participation in the auction in the wake of the silver price manipulation fiasco in the LBMA Silver Price auction on 28 January 2016.

It was on 28 january 2016 that the midday auction took a whopping 29 rounds to complete and the price derived in the auction was manipulated down by a massive 6% under where silver spot and silver futures prices were trading at that time. See the beginning of BullionStar blog “The LBMA Silver Price – Broken Promises on Wider Participation and Central Clearing” for further details about the 28 January auction.



Where is the Commitment?

On 15 August 2014, the day the LBMA Silver Price auction was launched, William Knottenbelt, MD at CME Group stated:

“Through our existing relationships with market participants and the broader silver marketplace we are uniquely positioned to provide a seamless transition for the spot silver benchmark in London.” 

“CME Group has a long and successful history of offering benchmark risk management and price discovery solutions for the global precious metals markets.” 

Then, on 22 March 2016, when CME and Thomson Reuters introduced some changes to the auction in the wake of the 28 January 2016 auction price manipulation, both parties released more spin on their continued commitment to the auction. Thomson Reuters’ Head of Benchmark Services, Tobias Sproehnle, in a statement that now looks to be hollow, said:

“these changes together with a comprehensive consultation with the broader silver community – producers, intermediaries and consumers - are a further demonstration of Thomson Reuters and CME Group’s commitment to providing innovative, market leading benchmarks for the Silver market.

While Gavin Lee, the head of CME Benchmark Services, led with an equally hubristic statement that:

“in consultation with Silver market participants, we are always looking for new ways to develop this benchmark further

These statements from CME and Thomson Reuters, less than a year ago, run totally contrary to the fact that the duo are now going to abandon the LBMA Silver Price auction ship, which will necessitate the appointment of a replacement administrator and calculation agent. Where is the continued “commitment” to the silver benchmark and the silver market that they were we eager to espouse last March?

Why the Hasty Departure?

According to the Reuters news report last Friday 3 March:

A spokesman for Thomson Reuters confirmed the company was stepping down from the process. CME could not immediately be reached for comment.

Not very informative or cooperative from either party when one of the providers was not even available to explain its exit rationale, and the other merely confirms a fact to its in-house news arm, a fact which the LBMA had already announced earlier that day to its members.

However, if you look at the CME Group website, a short announcement was added to its website on 3 March 2017, which states:

The forthcoming European Benchmark Regulation, due to be implemented in January 2018, prompted a review of the existing LBMA Silver Price administration arrangements and, in consultation with the LBMA, CME Group and Thomson Reuters have decided to step down from their respective roles in relation to the LBMA Silver Price auction.

This statement was also added to the Thomson Reuters website on 3 March.

Before briefly looking at the relevance of this “European Benchmark Regulation”, which the Reuters news article even failed to mention, its notable that the CME / Thomson Reuters early withdrawal was also covered on 3 March by the MetalBulletin website.

According to MetalBulletin (subscription site), the above statement by CME is apparently part of an identical statement which the LBMA released to it members on Friday 3 March (the LBMA statement).

MetalBulletin adds in its commentary that:

“CME is looking to streamline its precious metals division, with contracts in this area being its fastest growing asset. The exchange wants to focus on its core products, Metal Bulletin understands.”

What MetalBulletin means by this I don’t know. The logic doesn’t make any sense. The sentence doesn’t even make sense. Benchmarks are a core product of CME group. CME even states that it offers:

“the widest range of global benchmark products across all major asset classes”

CME Benchmark Europe Limited was specifically set up in 2014 to provide the calculation platform for the LBMA Silver Price. Furthermore, CME has just launched a suite of silver and gold futures contracts for the London market (launched in late January 2017), the silver contract being the “London Spot Silver Futures (code SSP)“. Even though these CME contracts have had no trading interest so far, the CME claims that it is currently “working with major banks to synchronize their systems to start trading” these contracts (London Spot Silver Futures and London Spot Gold Futures).

So why would CME want to voluntarily ditch the provision of a high-profile London silver benchmark, when it could attain trading synergies between the LBMA Silver Price and its new London silver futures contracts, or at the very least improve brand recognition in the market?  And not to forget CME and Thomson Reuters claim a”commitment to providing innovative, market leading benchmarks for the Silver market“.

European Benchmark Regulation

Turning to the new “European Benchmark Regulation”, what exactly is it, and why would it be relevant for the LBMA and CME and Thomson Reuters to mention the European benchmark Regulation in the context CME and Thomson Reuters pulling out of the LBMA Silver Price auction?

At its outset, the European Benchmark Regulation was proposed by the European Commission. The Commission’s proposal was also issued in coordination with a range of entities and initiatives such as MiFID, the Market Abuse Directive, the benchmark setting processes of the  European Securities and Markets Authority (ESMA) and European Banking Authority (EBA), and also the IOSCO financial benchmark principles.

According to law firm Clifford Chance:

The new [EU] Regulation is a key part of the EU’s response to the LIBOR scandal and
the allegations of manipulation of foreign exchange and commodity benchmarks

“The Regulation imposes new requirements on firms that provide, contribute to or use a wide range of interest rate, currency, securities, commodity and other indices and reference prices.”

“Most of the new rules will not apply until 1 January 2018″

“The new Regulation imposes broad ranging and exacting requirements
on a wide range of market participants. It may reinforce the trend to discontinue benchmarks and reference prices

According to law firm Simmons & Simmons:

The Regulation seeks to:

  • improve governance and controls over the benchmark process, in particular to ensure that administrators avoid conflicts of interest, or at least manage them adequately
  • improve the quality of input data and methodologies used by benchmark administrators
  • ensure that contributors to benchmarks and the data they provide are subject to adequate controls, in particular to avoid conflicts of interest
  • protect consumers and investors through greater transparency and adequate rights of redress.

The Regulation aims to address potential issues at each stage of the benchmark process and will apply in respect of:

  • the provision of benchmarks
  • the contribution of input data to a benchmark, and
  • the use of a benchmark within the EU.

All of these goals aspired to by the legislation of the European Benchmark Regulation seem reasonable and would benefit users of the LBMA Silver Price auction, so given the above, it seems very bizarre that CME and Thomson Reuters and the LBMA stated last Friday 3 March that:

The forthcoming European Benchmark Regulation, due to be implemented in January 2018, prompted a review of the existing LBMA Silver Price administration arrangements

Remember that the CME and Thomson Reuters service providers to the LBMA Silver Price are their specialist benchmark units “CME Benchmark Europe Limited” and “Thomson Reuters Benchmark Services Limited”. That is what these units do, administer and calculate benchmarks. This European benchmark Regulation has been known about for a few years. Especially known about by the benchmark units of CME and Thomson Reuters. The Regulation didn’t suddenly appear out of nowhere last week, as the above statement is appearing to hint at.

And why such a brief and unclear statement from CME, Thomson Reuters and the LBMA? Is this European Benchmark Regulation just an excuse being thrown out to distract from other issues that might really be behind CME and Thomson Reuters stepping down.

Or perhaps CME and Thomson Reuters are aware of issues within the current administration of the LBMA Silver Price that would make it difficult to comply with the new legislation or that would make it too onerous to comply? But such rationale doesn’t make sense either because why are CME and Thomson Reuters not bailing out of the all the benchmarks that they are involved in? Furthermore, if the European Benchmark Regulation is a factor, why would any other benchmark service provider such as ICE Benchmark Administration (IBA) bother to pitch in the LBMA’s forthcoming tender process to find a replacement for Thomson Reuters and CME?

Perhaps CME and Thomson Reuters are worried about future reputation damage of being associated with the LBMA Silver Price due to some brewing scandal? Or perhaps the powerful bullion banks within the LBMA wanted to scupper any change that there will ever be wider participation or central clearing in any future version of the auction?

I will leave it to readers to do their own research on this and draw their own conclusions.

A Banking Cartel vs. Wider Auction Participation

One issue which has dogged the LBMA Silver Price auction since launch is that it never gained any level of “wider participation” or market representative participation. There are only 7 bullion banks authorised by the LBMA to be direct participants in the auction, and there are zero direct participants from the silver mining, silver refineries, and silver sectors.

This is despite the LBMA, CME and Thomson Reuters all misleading the global silver market on this issue on many occasions, and claiming that there would be very wide participation in the auction after it was launched. See BullionStar blog “The LBMA Silver Price – Broken Promises on Wider Participation and Central Clearing” for a huge amount of factual evidence to back up this statement, including webcasts by CME, Thomson Reuters and the LBMA, and an interview by Reuters with LBMA consultant Jonathan Spall, formerly of Barclays. Here are a few examples:

The LBMA’s Ruth Crowell was claiming back in July and August 2014 that they were interested in having 111 direct participants:

“clear demand for increased direct participation, and we had 25% of those 444 coming back saying they would be interested, and we’re still interested in having all of those participants on board”

“The advantage with centralised clearing, particularly for the pricing mechanism, is that we can really exponentially grow the amount of direct participants

Jonathan Spall, LBMA Consultant stated that:

“The hope of course is that we get many more participants in the new benchmark process….while it is likely that we will start by having banks involved it is ultimately hoped that the wider market will participate, be they refiners, miners etc.

“Ultimately – and as I said before – the intention is that there is much wider participation. So yes, refiners, miners etc.

Harriett Hunnable, then of the CME Group, stated:

“So this is really the new world, this is not the old fixing…..this is wider participation…and the London bullion market is really encouraging that…this is the new world, or the LBMA Silver Price!”.

According to the CME / LBMA / Thomson Reuters presentations, there was supposed to be a “phase 3 introduction of centralised clearing

Central counterparty clearing will enable greater direct participation in the London Silver Price

In summary, central clearing would allow direct participants to participate directly in the auction without the need for bi-lateral credit lines. However, the plan for central clearing was quietly dropped. The CME and Thomson Reuters have now had 32 months in which to introduce central clearing into the silver auction and it hasn’t happened. Nor will it now. The fact of the matter is that the LBMA banks do not want wider participation and they don’t want central clearing of auction trades either. These banks, which at the end of the day are just costly intermediaries, essentially want to monopolise the silver auction and prevent wider participation, and prevent true silver price discovery. Could it be the banks through their LBMA front that have sabotaged the contract with CME and Thomson Reuters so as to reset the contract and re-start another tender process that will ensure that no wider participation can ever see the light of day?

It’s also important to note that there is no way for miners and refiners to be direct participants in the auction. This is because the LBMA has designed the auction participant rules to keep out refiners and miners (and anyone else that is not a bullion bank). The rules are specifically designed so that only bullion banks can satisfy the LBMA’s Benchmark Participant criteria. See section 3.13 of the LBMA Silver Price auction methodology document accessible here.

Currently only 7 bullion banks are direct participants in the auction, namely HSBC, JPMorgan Chase, Bank of Nova Scotia (ScotiaMocatta), Toronto Dominion, UBS, Morgan Stanley, and China Construction Bank.  Most of these banks are very influential on the LBMA Management Committee. HSBC, Scotia and Mitsui were in the auction from Day 1 on 15 August 2014. UBS joined the auction on 26 September 2014, JP Morgan Chase Bank joined on 14 October 2014, Toronto Dominion Bank joined on 6 November 2014. Mitsui left in either late 2015 or January 2016 (the exact date is unclear). China Construction Bank only joined the auction on 6 May 2016.

Lastly, Morgan Stanley only joined the LBMA Silver Price auction on 25 October 2016 (which is just 4 months ago), at which point the LBMA / CME and Thomson Reuters had the audacity to spin that 7 LBMA bullion banks trading in a shadowy auction of unallocated silver accounts in London somehow represents the global silver market:

CME: “The addition of another member brings greater depth and diversity to the market and underlines the ongoing globalisation of the Silver Price as a leading, liquid precious metals benchmark.”

Thomson Reuters: “With the addition of Morgan Stanley to the panel, the LBMA Silver Price provides even deeper insight into the global silver market. We continue to welcome new participants to this essential mechanism for the markets.”

LBMA: “They [Morgan Stanley] add depth and liquidity to the auction and I look forward to other market participants joining in the future.”

LBMA Silver Price is NOT Representative of Silver Market

But, to reiterate (and as was stated previously in this blog), the LBMA Silver Price auction is not representative of the global Silver Market whatsoever, and it does not meet some of the simplest IOSCO benchmark requirements:

“IOSCO benchmark principles state that a benchmark should be a reliable representation of interest, i.e. that it should be representative of the market it is trying to measure. Interest is measured on metrics such as market concentration. In the Thomson Reuters methodology document (linked above), on page 11 under benchmark design principles, the authors estimate that there are 500-1000 active trading entities in the global silver market.”

The Thomson Reuters methodology document from August 2014 also admitted that “volumes in the LBMA Silver Price are a fraction of the daily volume traded in the silver futures and OTC markets”.

Why then are 7 LBMA bullion banks allowed to monopolize the representation of 500 – 1000 active trading entities from the global silver market within the auction, an auction that its worth remembering generates a silver reference price which is used as a global silver price reference and pricing source?

BullionStar investment silver bars and coins

Refiners and Miners

Based on the current rules, the vast majority of the world’s silver refiners cannot directly take part in the LBMA Silver Price auction.

Only 8 precious metals refiners are Full Members of the LBMA while 25 refiners are associates of the LBMA. Of the 8 full members, 5 of these refiners are on the LBMA refiner Referee panel, namely, Argor-heraeus, Metalor and PAMP from Switzerland, Rand Refinery from South Africa, and Tanaka Kikinzoki Kogyo from Japan. These refiners were added to the panel as LBMA Associates in 2003, and were only made Full Members in 2012. The only reason they happened to be fast-tracked as full members of the LBMA was due to their status as Referees for the LBMA good delivery list. Even the other major Swiss based refinery Valcambi is still not a full member of the LBMA.

Based on the current participant criteria of the Silver auction, where only full LBMA members could conceivably become direct participants, 25 of the refiners that are LBMA Associates cannot directly take part in the auction even if they wanted to. Candidates for Full LBMA Membership also have to jump through a number of hoops based on sponsorship by existing members, business relationships, due diligence, and involvement in the precious metals markets.

For a refiner to even become a LBMA associate, the refiner must have already attained Good Delivery Status for its silver or gold bars. There are about 80 refineries on the LBMA’s current Good Delivery List for silver. The chance of the vast majority of these refiners taking part in the LBMA silver auction is nil since not only are they not LBMA full members, they aren’t even LBMA associates.

Based on the current auction criteria, it’s without doubt literally impossible for nearly all silver producers / miners on the planet to directly participate in the LBMA Silver Price auction. Precious metal mining companies are not normally officially connected to the LBMA, and would more naturally be members of the Silver Institute or World Gold Council or another mining sector organization. So it’s confusing as to why the LBMA even mentions mining companies as possible auction participants since there are no mining companies that are Full Members of the LBMA, so they cannot be participants in the silver auction. The only mining companies that are even “Associates” of the LBMA are Anglogold Ashanti and Coeur Mining.

In 2014, Coeur Mining’s treasurer, referring to the LBMA Silver auction said:

“We hope to have the opportunity to become a direct participant down the road and look forward to working with the LBMA, CME and other silver producers to drive the evolution of this market.”

The unfortunate Coeur Mining now looks like it has been strung along by the LBMA with empty promises that it can somehow someday participate in the silver auction, but this is literally a fiction given the way the auction rules are currently set up.


In its announcement on 3 March, the LBMA said that it will shortly launch a tender process to appoint a replacement provider. The LBMA told Reuters News:

“We would be looking to identify a new provider in the summer, and have the new platform up and running in the autumn”

However, given the abysmal track record of the LBMA Silver Price, the question that should really be asked at this time is why is the bullion bank controlled LBMA even allowed to be in charge of such an important “Regulated Benchmark” as a global silver price benchmark, a benchmark that has far-reaching effects on global buyers and sellers of silver.

Take a brief look back at how the last tender process run by the LBMA for the London silver price was handled.

A Silver Price Seminar held by the LBMA on 19 June 2014 was not even open to the wider bullion market. As Ruth Crowell, CEO of the LBMA, told the publication MetalBulletin in an October 2014 interview:

“Not just our members, but ISDA members, and any legitimate members of the market were invited to the seminar. We also had observers from the FCA and the Bank of England. We wanted to keep [attendance] as wide-ranging as possible but to avoid anyone who perhaps would be disruptive

What is this supposed to mean? To prevent anyone attending the seminar who might have a different view on how the global silver price benchmark should be operated that doesn’t align with the view of the LBMA?

The actual process of selecting the winning bid from the shortlist of tender applicants was only open to LBMA Full members and Seminar attendees via a 2nd round voting survey. The independent consultant review that was part of the selection process, was conducted by someone, Jonathan Spall, who was not independent of the former fixings and so should not have been involved in the process.

Promises of wider participation involving refiners and miners were abandoned. Promises of central clearing of auction traded were thrown out the window. Prior to launch, the auction platform was hastily built by Thomson Reuters and CME without an adequate market-wide solution for clearing silver trades. Another of the bidders, Autilla/LME, had a working auction solution which would have allowed wider market participation at August 15 2014 go-live, but this solution was rejected by the LBMA Management Committee, LBMA Market Makers and the LBMA Data Working Group, the groups which had the ultimate say in which applicant won the tender.

There were only 3 participants in the LBMA Silver Price auction (all of them banks) when it was launched in August 2014, and two of which, HSBC and Scotia, were parties to the former London Silver Fixing. The LBMA Silver Price auction was therefore an example of same old wine in a new bottle. The same 2 banks, HSBC and Scotia are now defendants in a silver price manipulation class action suit in New York. There are now only 7 direct participants in the LBMA Silver Price. These are all bullion banks. This is 32 months after the auction has been launched. The LBMA accreditation process specifically prevents refiners and miners from joining the auction. As there are 500 – 1000 trading entities of silver globally, the LBMA Silver Price mechanism is totally unrepresentative of the silver market.

The defection of CME and Thomson Reuters now provides a one-off opportunity for the global silver market to insist that the current scandal ridden current auction be scrapped and taken out of the hands of the bullion bank controlled London Bullion Market Association (LBMA). It is also an opportunity to introduce a proper silver price auction in its place that is structured to allow direct participation by hundreds of silver trading entities such as the world’s silver refiners and miners, an auction that employs central clearing to allow this wider participation, and an auction that is based on trading real physical silver and not the paper credits representing unallocated claims that the participating London bullion banks shunt around between themselves. This could help lead to real silver price discovery in the global silver market. However, the chances of this happening with the LBMA still involved in the new tender process are nil.

The LBMA Silver Price – Broken Promises on Wider Participation and Central Clearing

On 28 January 2016, the midday LBMA Silver Price auction took 29 rounds to establish a final price of US$13.58 which was manipulated down by a whopping 6% below where silver spot and futures prices were trading at that time. This auction fiasco and price manipulation has caused deep concern among silver benchmark price users as well as consternation among the Gang of Three companies which own/administer/operate the LBMA Silver Price, namely the London Bullion Market Association, Thomson Reuters Benchmark Services, and CME Group.

Notice in the following financial data distribution screenshot (taken from a US terminal) of the entire set of rounds in the LBMA’s distribution of the Silver Price auction results that day, that a trading entity was progressively increasing the Ask (Sell) volume between each round, thereby causing the auction algorithm to continual try lower opening prices each round, because the Bid volume was not increasing by enough to  meet the tolerance threshold between bid and ask volume (i.e. the imbalance was too great). Notwithstanding the possibility that collectively no participants or other traders felt the desire to arbitrage this price anomaly during the auction, it appears that someone was turning up the sell volume as the price went lower every 30 seconds for at least 14 minutes between midday and 12:15pm that day.

Silver Price auction rounds

Joint statement by Thomson Reuters, CME Group and the independent Silver Price Oversight Committee

On 4 February 2016, after scrambling and squirming for an entire week, Thomson Reuters, the CME Group, and the ‘Independent’ Oversight Committee for the LBMA Silver Price released a statement solely by email. This statement was not published on the websites of either the CME Group, Thomson Reuters, nor the website of the LBMA, hence, many people would not have seen it. Therefore, the full statement that they released is as follows:

“Developments to LBMA Silver Price Benchmark

Joint statement by Thomson Reuters, CME Group and the independent Silver Price Oversight Committee

LONDON, February 4, 2016 – Thomson Reuters and CME Group with the agreement of the LBMA and the independent LBMA Silver Price Oversight Committee today announce a package of measures to further develop the silver benchmark.

In addition to its regular meetings, the Committee has held two extraordinary meetings since the auction on Thursday January 28, 2016 and has been working with the benchmark administrator (Thomson Reuters) and calculator (CME Group) to address concerns. The regulatory authority, the Financial Conduct Authority, has been kept fully informed.

At the meeting, the Committee endorsed an intervention protocol agreed by the administrator and calculator to suspend an auction if they believe the integrity of the auction or participants is threatened.

This protocol has been in place since Friday January 29, 2016. All participants and the FCA have been informed of its implementation.

The Committee, Thomson Reuters and CME Group will present details of the measures to participants, their clients and the Financial Conduct Authority for discussion and implementation at the earliest opportunity.

These include: a blind auction, where only prices and not volumes are disclosed to participants until after the auction has closed; increasing the settlement tolerance where necessary to maintain the integrity of the auction; change the structure for sharing the differential to encourage full participation; and a package of measures to increase participation in the benchmark process and to encourage non-banks’ participation.

In addition we look at the viability of introducing centralized clearing of all auction trades, to make the process easier and less capital-intensive for participants.

“We are committed to maintaining the integrity of the LBMA Silver Price,” said Neil Stocks, chairman of the Oversight Committee. “We are introducing enhancements and are consulting on further developments with the many users who rely on this important benchmark.”

Note to editors

The LBMA Silver Price is calculated daily on a transparent electronic auction platform operated by the CME Group; Thomson Reuters is responsible for administration.


Brian Mairs, Thomson Reuters

Donal McCarthy, CME Group”


The above statement from Thomson Reuters, CME Group and the Oversight Committee is, in my view, misleading from a number of perspectives. As you will see below, the above statement fails to mention that increased participation in the benchmark auction, as well as non-bank participation in the auction, were promised by Thomson Reuters, the CME Group and the LBMA in July and August 2014, which was before the LBMA Silver Price auction was even launched.

The above statement also fails to mention that the introduction of centralized clearing was also promised by Thomson Reuters, CME Group and the LBMA in July and August 2014, again before the LBMA Silver Price auction had even been launched.

It is now February 2016, more than 18 months after the LBMA Silver Price was introduced, and here we have Thomson Reuters and the CME Group with the gall to state that they have suddenly formulated plans for wider participation and central clearing, when all along, these plans were actively discussed by the LBMA and CME Group during July and August 2014 as practical mechanisms that were promised to be implemented to address the pricing concerns of the wider silver market community and the spirit of the IOSCO benchmark Principles.

Given that the details of wider auction participation and central clearing of silver auction trades were quietly dropped and evidence of said discussion was even actively removed from the websites of CME Group and Thomson Reuters, it is not unreasonable to conclude that various powerful entities representing the London Bullion Market have been doing everything they can to prevent wider participation in the Silver auction, and doing everything they can to prevent central clearing being implemented for Silver auction trades.

London Silver Price Seminar – CME Webinar 29 July 2014

On Tuesday 29 July 2014, just over two weeks after the CME Group and Thomson Reuters had been awarded the contract to run the LBMA Silver Price auction process, and just over two weeks before the 15 August 2014 auction go-live date, “CME Group Metals Products and OTC Solutions” held a webinar titled the ‘London Silver Price Seminar’.

Recall that at that time, the new auction was still being referred to as the ‘London Silver Price’, and not the ‘LBMA Silver Price’. Critically, at various points in the 29 July webinar presentation (38 minutes long), reference was made to the new silver auction eventually using CME Clearing Europe as a central clearing counterparty (CPP) for all trades in the LBMA silver price auction.

The webinar consisted of presentations by four CME Group staff, namely, Jack Allen of the CME business team, Michel Evaraert, Head of OTC solutions for CME, Harriet Hunnable, CME’s Global Head of Precious Metals, and Anindya Boral, also of the CME business team. There was also a selection of Q&A from attendees at various points in the webinar.

From July 2014 to October 2014, a link to this CME webinar presentation was prominently listed on the CME Group’s LBMA Silver Price web page under the section ‘Additional Resources’, with the description “Our recent webinar covers a range of topics to the new LBMA Silver Price“. The following screenshot from the 9th October 2014 Wayback Machine archive link to the page in question can be seen below, with the Webinar link highlighted.

CME 9th October 2014 site

Sometime between October 2014 and early January 2015, but at least before 12th January 2015, the CME’s webinar link had been removed from the ‘Additional Resources’ section of the same webpage.

CME 12th January 2015 site

Now, why would such a useful ‘Additional Resources’ link in the form of a webinar covering “a range of topics to the new LBMA Silver Price” suddenly be removed from the website of the LBMA Silver Price calculation agent (CME) just a few shorts months after the new silver fixing auction was launched?

For those who want to see this webinar, don’t panic, because the full CME webinar from 29 July 2014 on the LBMA Silver Price can be seen here:

The CME webinar can also be played at this direct CME website. Let’s see how long this link stays live: http://cmegroup.adobeconnect.com/p3o9n3qj6gr/

At the outset of the 29 July 2014 webinar, the CME Group  displayed a power point slide showing a timeline divided into three phases:

  • Phase 1 was listed as ‘Today (July 29th) till August 15th’, described as ‘Day 1 participation’ and ‘business as usual’.
  • Phase 2 was titled ‘Broader base Participation”, including “Tier 2 participation”.
  • Phase 3 was ‘Extended Participation’, ‘Central Clearing via CME Clearing Europe’, and an ‘on-boarding process’, and also ‘EUR & GBP ability’.

Harriet Hunnable introduced the webinar, by saying:

“We wanted to make sure that we were addressing some of the questions that were coming to us from end-users, from silver producers and refiners and the like with regard to this transition that is happening in the London silver market. We wanted to make sure we were doing this pretty quickly given the number of inquiries we were getting and also the depth of business change that end-users were trying to prepare themselves for.”

Harriett Hunnable also stated that the CME wanted to”

enable more wide participation over time, directly towards this key market benchmark and reference price.”

Harriett Hunnable introduced Jack Allen of the CME business team, saying that Jack Allen:

“will be talking about what the banks are doing now and other participants can do over time to be part of this new London Silver Price”.


Both Jack Allen and Michel Everaert highlighted that the CME Group seemed to be under time pressure to deliver the new electronic based silver auction between July 11 and August 15:

Jack Allen said

“Time is short, 5 weeks, from when we were mandated, which is tough, it’s tough.”

Michel Evaraert said that:

“this really is what we call phase 1 of this effort. We were under very tight timelines to move the auction process into this new model…..we fully expect more functional changes over time…..we have simply electronified this (existing) process and we’ve introduced an audit trail and significantly more transparency to that process…”

Jack Allen’s explanation of the CME’s three phases highlights how the CME planned that the LBMA Silver Price would progressively evolve over the period after it was launched:

For Day 1 participation, what have we got? We’re looking at the LBMA Market Makers with consistent and constant bilateral credit facilities. These are very much encouraged due to restrictive timelines, and we know that this as a core participation that will work.”

“For the corporate and commercial user it will be business as usual. As a commercial user from day 1 please reach out to your correspondent banks and trading counterparties. There will be very little difference to what you previously had and what you’re going to be getting on 15th August”.

On Phase 2, Allen said:

Phase 2 we are looking for broader participation. On Day 1 our market makers may not be up and ready really yet. We will be very much again encouraging them to join, as well as suitable bilateral, what I would call, upper echelon banks with a good credit basis”.

On Phase 3, Allen said:

Extended Participation, we envisage central clearing via CME Clearing Europe under the auspices of the UK and European regulated authorities which should effectively open the door for most participants.


There were a number of Q&A breaks during the CME’s 29 July 2014 webinar. Many of the questions and answers from the webinar are very important and revealing, and are therefore documented below. Jack Allen read out the questions that came in from webinar participants:

Question: We have a question around getting the banks signed up and negotiating the legal documentation.

Jack Allen: “I can answer that. Basically it’s going pretty well at the moment, in terms of numbers without being specific. I think we can pretty much say in category one, two and three, with one being the top-tier, we’ve probably got between 6 and 7 verbal interests, good interests… I would say there’s probably a couple of mid-term ones on the lower scale, 5 of those are still considering what they are going to do. But it’s actually looking very good at the moment.

Question: “Is the platform open by invitation or is there a process for new participants to go through?”

There seemed to be hesitation by Jack Allen to answer this question (listen to the webinar to see what I mean), and Harriet Hunnable then stepped in and answered the question:

Harriet Hunnable: “The LBMA is going to be running the accreditation for phase 2 participants, they are setting up some criteria, and it will be open for people to apply.


Question: “What is the targeted timeframe for moving to centralised clearing?

Jack Allen: We’re basically starting the process as soon as possible. Let’s get this up and running by 15th August and then it’s all hands to the pumps on the clearing side so hopefully it will happen soon.”


Harriet Hunnable added:

“It’s possible to clear some trades already today on CME Europe and also in the US, to clear silver forwards and spot trades already, these are for loco London delivery. The work we’ve got to do is to set this up so that’s it’s part of the platform so it’s a level playing field for participants

Anindya Boral will be starting to do a big drive to enable cleared transactions through our clearing house and wider participation in August, so if you’re interested in that please get in contact with your broker or clearer or current bank. Boral is going to be doing a lot of work across CME Europe to facilitate that.”

There then followed a short discussion by Anindya Boral addressing central counterparty clearing through CME Clearing Europe, and a discussion of the slide which follows below. This is a very important slide because a variant of this slide appeared in the Thomson Reuters / CME Group / LBMA webinar presentation on 19 August 2014 (see below), but by then, the reference to CME Clearing Europe in the 19 August version of the same slide had been watered down significantly.

SLIDE 7 from CME Webinar:

CME 29th July phase 3

Slide text

Phase 3, Centralised Clearing

“Central counterparty clearing will enable greater direct participation in the London Silver Price”.

  • We anticipate using CME Group’s London Clearing House – CME Clearing Europe – for the London Silver Price

 By serving as the counterparty to every transaction, CME Clearing Europe will become the buyer to every seller and the seller to every buyer, virtually eliminating credit risk between market participants

  • Client connectivity to the Clearing House and clearing firm readiness will be the key to delivering centralised clearing for the London Silver Price
  • Please contact one of CME Clearing Europe’s 20+ clearing firms, or your preferred clearing firm or broker

That slide concluded the CME Group webinar on 29 July.


Reuters Global Gold Forum – 17 July 2014

On 17 July 2014, less than a week after the CME Group and Thomson Reuters had won the LBMA silver contract, Jonathan Spall of G Cubed Metals (and formerly of Barclays Capital) appeared in a Thomson Reuters Global Gold Forum webinar session where he was interviewed by Jan Harvey of Thomson Reuters about the new silver auction and associated topics.

A LBMA press release from 11 July 2014, titled “LBMA SILVER PRICE SOLUTION: CME GROUP & THOMSON REUTERS“, stated that the market consensus (to choose CME and Thomson Reuters)…

“…was also supported by the independent review conducted by Jonathan Spall of G Cubed Metals Ltd. As part of his review, Jon carried out in-depth interviews with the seven companies who delivered presentations at the seminar on the 20th June.”

So the review written by Jonathan Spall, the ‘independent consultant’ hired by the LBMA, also supported the choice of CME Group and Thomson Reuters to operate the new LBMA Silver Price auction. The regular Thomson Reuters global gold forum over the Reuters platform is hosted by Reuters journalists, and takes the form of a question and answer session with precious metals industry representatives, often facilitated by Jan Harvey.

Jan Harvey (Thomson Reuters):

“What made the successful proposal successful, as far as you were concerned?”

Jonathan Spall (G Cubed Metals Ltd)         (part of answer to the above question)

“The hope of course is that we get many more participants in the new benchmark process….while it is likely that we will start by having banks involved it is ultimately hoped that the wider market will participate, be they refiners, miners etc. The idea of starting with banks is that they are likely to have credit lines with each other, and without centralised clearing that is obviously vital.”

 So, centralised clearing precludes the need for using bilateral credit lines in the auction, and therefore removes one of the barriers to entry that favours the bulllion banks as the exclusive direct participants in the auction. The Thomson Reuters Forum continued:

Jan Harvey: (with a question from the floor):

“How is this going to work, as not everyone has credit with everyone. What if the algo (algorithm) matches you against someone with whom you don’t have credit?”   

Jonathan Spall (G Cubed Metals Ltd):

That’s why it’s starting with the banks. Ultimately, there may be some form of agreement such that if a refinery, for example, wants to become part of the benchmark (and I very much hope that they do) – then a bank could agree that if the algo matches the refiner/miner etc to a name where they do not have credit lines, the bank would be allowed to intermediate.”

Jan Harvey:

“Another question from the floor: ‘Will there be a published parallel run of the silver fix? And will only banks get access to the platform and also the run of the auction?’

Jonathan Spall (G Cubed Metals Ltd):

“There all be parallel testing – so basically during August we can see if the system and software works. But it will not take place at noon. The idea of the auction is that volumes and the number of buyers and sellers will be published unlike now. So you can see that there were 3 buyers and 1 seller perhaps with 3 million ounces of silver taking place the names of the buyers and sellers will not be released though.

Ultimately – and as I said before – the intention is that there is much wider participation. So yes, refiners, miners etc.


Jan Harvey (also from the floor):

“Will the volumes and number of sellers be published in real-time?”

Jonathan Spall (G Cubed Metals Ltd):

“My understanding is that it will be.”

Jan Harvey

“From the same questioner – ’Will that be the case as of 15th August or not initially?’”

Jonathan Spall (G Cubed Metals Ltd):

“There is an enormous amount to sort out in less than a month – certainly the intention is there but not necessarily from day 1. There will also be the ability to see orders of the bank themselves and clients – again this will follow later. So orders will be gross – ultimately – and not net. The intention is to make it as transparent as possible but it will not be all singing and dancing on day 1.”



Thomson Reuters Webinar 19 August 2014 – including Ruth Crowell (LBMA) and Harriet Hunnable (CME)

On Tuesday 19 August 2014, Thomson Reuters hosted two sessions (London morning and afternoon) of a broadcast webinar titled “The New LBMA Silver Price, Greater Transparency, Facilitated by Thomson Reuters, CME Group, and LBMA”. The morning session took place from 9.30am – 10:30am London time. Note that by August 19 2014, the CME’s Phase 1 had by that time passed (i.e. it was after the 15 August 2014 launch date of the LBMA Silver Price).

Douglas Pollack, Thomson Reuters Head of Market Development for Commodities in Europe, hosted the webinar. Other speakers included Bernd Sischka, Global Metals Proposition Manager for Thomson Reuters, Ruth Cowell, LBMA CEO, and again, Harriet Hunnable, of CME metals products.

This webinar was available on the following link but has been taken down: http://edge.media-server.com/m/p/j82fcpca/st/TR/. Accessing this link now returns an error message:


Lucky however, the morning session of the LBMA – Thomson Reuters – CME Group 19 August 2014 webinar can still be viewed in full here:


Attendees at the 19 August 2014 could post questions to the panel during the webinar to be answered in the Q&A parts of the session.

Bernd Sischka began the 19 August 2014 webinar, and said that he would cover methodology and auction process, and then cover the details of participation:

“The third point I will highlight, who can participate in the LBMA Silver Price auction, and highlight the requirements for any new market participants who are looking and aiming to participate in the auction”.

This is what Bernd Sischka then said about auction ‘Participation’:

“So who can participate in the LBMS Silver Price auction? There are a number of market participants which have signed up for Day 1 participation and successfully participated in the auction process, but obviously given that this benchmark is meant to provide access for a wider range of market participants, and also increase the transparency and establish the LBMA Silver Price as a widely used benchmark, there obviously are certain ways that other participants who have heard about the new LBMA Silver Price, who can actually fulfill certain criteria for participation.

However, Bernd Sischka did not explain or even list what the LBMA accreditation criteria consisted of:

“So I will just briefly highlight what those requirements are. First of all there are certain benchmark criteria which are set out by the LBMA, given that the LBMA is accrediting all the market participants. That is probably one of the key requirements that have to be fulfilled..

.. followed on by from the Thomson Reuters side, we’ve got a participant code of conduct which is a legal document which we require as the administrator, for every market participant to sign up to, and then thirdly from the CME side, obviously given that the CME operates the electronic auction platform, there are technological requirements and documents, and legal documents, that need to be signed off by the individual market participants, in order to be able to participate in the auction platform.”

About the methodology document, Bernd Sischka said:

“the second key document is a very extensive methodology document which goes into much more detail which was drafted by the CME, LBMA and Thomson Reuters as a joint document”.


During Ruth Crowell’s part of the session, she discussed the survey that the LBMA had launched in May 2014 to solicit views on improvements to the then existing Silver Fixing. This survey received 444 responses from interested parties in the Silver Market. While discussing slide 19 of the presentation, Crowell stated that there was a:

clear demand that came out that there was market satisfaction with the current mechanism, but demand for some improvement, particularly further transparency, as well as increased direct participation, and we had 25% of those 444 coming back saying they would be interested, and we’re still interested in having all of those participants on board, and I can talk a little bit about that later, and I know Harriett will as well.”

However, the later discussion in the webinar from Ruth Crowell and Harriet Hunnable did not talk about extended participation until an attendee of the webinar specifically asked a question about it.

After the formal presentation completed, there was a Q&A session for the attendees, with the questions submitted via the webinar and read out by Douglas Pollack.


“According to the presentation, phase 3 introduction of centralised clearing and CCP….Does this mean that the London price, trading loco London, becomes more exchange based, rather than OTC market?”

Harriett Hunnable:

“Lets go ..to slide 27,..ehm..central clearing is not something we’ve spoken about here because we wanted to focus on what’s up and running on Day 1 and how it’s set up”

Note: By 19 August 2014, the CME’s slide on ‘Phase 3 – Centralised Clearing’ had been distorted and the first bullet point which had previously stated…

Central counterparty clearing will enable greater direct participation in the London Silver Price”

had now become…

“CME Group’s London Clearing House – CME Clearing Europe – can facilitate central clearing CCP of spot transactions such as the LBMA Silver Price”

TR 15 Aug 2014 phase 3

Harriett Hunnable continued:

We have discussed with the LBMA and with a number of interested participants…., it is possible today to centrally clear through our clearing houses, at CME Group silver spot and silver forward transactions and it is possible that at a later stage we introduce under the auspices of the LBMA, central clearing, into this model…

..and we’ve called that phase 3, just to illustrate that there are several steps that need to be gone through to get there. ….to answer that question, will it become an exchange traded market, no, this remains an over the counter product, it is not listed on a recognised investment exchange, so whether it remains like it is today, whether it is bilaterally cleared, from one participant to another participant, or centrally cleared with a clearing house in the middle, it will remain an over-the-counter marketplace, and it will not be an exchange marketplace.”


Ruth Cowell:

The advantage with centralised clearing, particularly for the pricing mechanism, is that we can really exponentially grow the amount of direct participants, and that was something that was really highlighted during the working group and the testing is that credit is an issue, and obviously in the old model, the participants in it had quite high credit with one another, but managing the credit in the new system is something that we’ve …..addressed, but there is a limit when it comes to.. there’s a difference between a small participant and one of the larger institutions credit wise, you still want to allow liquidity, but centralised clearing is a way to get to meet all of those things …..”


“What happens to London Precious Metals Clearing Limited?”

Ruth Cowell:…. nothing happens to London Precious Metals Clearing Limited. It remains the institution which is separate from the LBMA…..and.. it continues business as usual..”

Harriett Hunnable: “..business as usual in London.

Douglas Pollack:Nice easy answer on that one!”

It appears to me that there was a reluctance of the presenters to talk about London Precious Metals Clearing Limited (listen to the webinar to see what I mean).



“Will actual direct participating members who are direct participants become brokers for their underlying clients?”

Harriett Hunnable:

“They may do and some of them may decide not to…so it is very possible that we have a major producer who wants to become a direct participant and does so. It is possible that we have a trading company and a bank who are…both of whom act as brokers for other participants, and accept their orders and place them on the fixing …so the model allows for clear direct participation and what you might call aggregated direct participation…so yes, we expect some of the participants to take direct orders from others but it’s not a requirement.”

Ruth Cowell:

“And that’s the way it has traditionally worked…I think for a lot of participants, particularly those who haven’t been involved in the process, if you’re looking at institutions, like producers, if they have significant business to do during the auction then they could probably make a business case to become a direct participant, ..put the controls and the governance in place, however, if it’s something that they are just doing a few times per year, they probably, I would expect, would do business the way they traditionally have, through their metals partner”

That said…many of the accredited participants have made it clear that if you’re someone who is another bank or trading house, they may not be willing to take your orders on the long-term basis, and that is something that has got to change….and because there is direct participation that is comparable…if you’re the type of player that should be directly involved from their perspective, they reserve the right to say no.”

Harriett Hunnable:

So this is really the new world, this is not the old fixing…..this is wider participation…and the London bullion market is really encouraging that…this is the new world, or the LBMA Silver Price!”.


“Why have some participants refused to take others from a lot of semi-pros for the new LBMA Silver Price?

Ruth Cowell:

What we want to see is more direct participation. If you’re an institution who should be directly involved or able to have the controls, because you’re participating in another benchmark, the market would like to see those people there as well, which is why a lot of the traditional players have said we will not take your orders. We don’t want to have just the liability on ourselves, we want everyone to put direct participation in, so it stops being only a few institutions.

In the new mechanism it’s definitely a big change….in that there’s not the ownership and liability that we had with the old,…..ultimately everyone is a participant, they are not obliged to participate every day, if they don’t participate then they don’t share the differential so it is something that you can be accredited for and when you have business, you put that business in, it’s not a blind ….in the same way as the past.”



What phase is the current implementation, is there a roadmap to phase 3?”

Ruth Cowell:

There is a roadmap for phase 3, there is also a roadmap for phase 2..and that’s something we’ve been working with the participants and potential participants on, in conjunction with the CME Group and Thomson Reuters. So if there is interest I invite you to engage with the LBMA and we can put you in touch with the right people to start sharing and building that roadmap together.


I think the above spin speaks for itself. No comment necessary. But I advise readers and especially journalists to listen to the 2 webinars above, and to begin asking proper questions to the LBMA, to Thomson Reuters, and to the CME Group.

The above webinar was the morning Thomson Reuters webinar session. Coverage of the 19 August 2014 afternoon webinar session (London afternoon) by a Resource Clips article ‘Claims of greater transparency fail to satisfy critics of the LBMA silver price referred to it thus:

“Phase II will bring more participants, possibly including trading houses, large refiners and producers, according to the CME, which expects to see “a big jump in terms of who can take part.” Those who seldom trade or can’t meet the LBMA criteria may do business through a broker or banker.

Wider participation will further enhance transparency says Harriet Hunnable, CME head of precious metals”.

There was also a Q&A session at the second August 19 webinar and the Resource Clips web site covered some of the Q&A topics. The questions chosen to be answered in the second webinar were far less challenging than those in the morning webinar session, and, according to Resource Clips, covered topics such as regulation of the auction, purpose of the algorithm, reason for having a minimum 100,000 ounce lot size and ‘physical’ delivery.

Even so, Resource Clips concluded in its article that:

Some of those (Q&A) replies might have benefited from greater conviction, not to mention clarity.”


LBMA distances itself from the scandal

Some journalists, such as in Platts, have admittedly now begun to ask the pertinent questions. But the ‘Gang of 3′ entities that should be answering the questions are refusing to do so.

Apart from the mis-leading and disingenuous 4 February “Joint statement by Thomson Reuters, CME Group and the independent Silver Price Oversight Committee” (see above), the auction owner (LBMA), administrator (Thomson Reuters) and calculation agent (CME Group) have not co-operated with those asking the questions, such as Platts. From a Platts article on the afternoon of 4 February 2016:

“The LBMA, which does not participate in daily operations, declined to comment on the matter.

Both CME and Thomson Reuters declined to comment, pending an investigation into last week’s settlement issues.”

The LBMA looks to be running scared and has distanced itself from the latest silver price manipulation controversy. The one noncommittal acknowledgement that the LBMA did communicate on 2 February (after pressure and contact from silver market participants) was only transmitted via a link to a page that had been uploaded to an obscure email management software app called createsend.com – See link http://createsend.com/t/j-85A8744E09A02D2B and below is the screenshot.  Notice how the LBMA seeks to highlight in a few places in its release, the roles and responsibilities of Thomson Reuters and the CME Group. Rats on a sinking ship perhaps:


crisis mgt lbma

The above bereft LBMA update does not even acknowledge that the LBMA owns the intellectual property rights to LBMA Silver Price (as well as similar ownership rights to the LBMA Gold Price). The LBMA registered the Trademarks for both the LBMA Silver Price and the LBMA Gold Price on the same day, August 15 2014. See LBMA Silver Price Trademark and LBMA Gold Price Trademark.

The LBMA also updated its website after 28 January 2016 by adding an entire ‘Governance and Oversight’ section near the top of its LBMA Silver Price description page pinning the responsibility on Thomson Reuters and the CME Group.

The first screenshot is from a Google cache imprint on 28 January 2016. This cache has now updated but a Wayback Machine imprint with the same information from 22 September 2015 shows the same imprint.

silver with Mitsui

The second current version of this LBMA Silver Price web page shows the hastily added ‘Governance and Oversight’ paragraph, with similar text to that which appeared in the LBMA’s arms-length email stunt using createsend.com.

Governance added - silver without Mitsui

In the above 2 screenshots, you will notice that the ‘Accredited Price Participants’ paragraph has also been highlighted. It was only after the 28 January 2016 silver price fiasco auction that the LBMA suddenly changed its text and pulled Mitsui and Co Precious Metals Inc from the list of 6 participants of the LBMA Silver Price. Why were there 6 participants accredited on 28 January, but only 5 participants accredited on 29 January? And why was Mitsui still listed as a silver auction participant when it was reported in October 2015 to be “shutting down precious in London and New York in December” according to Reuters “Mitsui to shut precious metals business in London, New York-sources“.

Even an early version of an article from BullionDesk on 28 January reported that

The [silver] price is set every day by six participants – HSBC, JPMorgan Chase Bank, Mitsui & Co Precious Metals, The Bank of Nova Scotia, Toronto Dominion Bank and UBS – using a system run by CME and Thomson Reuters“.

Thomson Reuters (as administrator of the LBMA Silver Price) only very recently added a number of compliance type documents to its website. In one of them, the ‘silver price participant code of conduct‘, there is a paragraph about a participant needing to give 1 month’s notice of withdrawing from the auction:

Participants Notice of Withdrawal
1.5 Participants considering withdrawing from the LBMA Silver Price Benchmark auction process must endeavor to provide Thomson Reuters with at least one calendar month’s notice in order to protect the continuation of the Benchmark.

On launch day in August 2014, the LBMA trumpeted the addition of Mitsui to the LBMA Silver Price but has now reverted to very quietly amending its website when Mitsui has departed.


The Gang of Six

The new LBMA Silver Price was launched on 15 August 2014, administered by Thomson Reuters, with CME Group as auction calculation agent. On launch day there were only 3 direct participants, Bank of Nova Scotia (Scotia Mocatta), HSBC Bank USA NA, and the now infamous Mitsui & Co Precious Metals Inc. HSBC and Scotia had been existing members of the London Silver Market Fixing Limited company, in conjunction with Deutsche Bank.

On 15 August 2014, the LBMA  claimed that it “fully expects the list of price participants will grow over the coming weeks” and that “these participants include banks, trading houses, refiners and producers”. This growth of participants, as readers will be aware, never happened. Scandalously, only 3 further participants ever joined the LBMA Silver Price auction, and these 3 participants were all banks which had representatives on the 10 person LBMA Management Committee. UBS joined the Silver auction on 26 September 2014JP Morgan Chase Bank joined the Silver auction on 14 October 2014, and The Toronto Dominion Bank signed up to the auction on 6 November 2014.

During that time, the 10 person LBMA Management Committee of the LBMA included Steven Lowe of Bank of Nova Scotia-ScotiaMocatta (Vice-Chairman), Peter Drabwell of HSBC Bank USA NA, Kevin Roberts of JP Morgan Chase Bank, Philip Aubertin of UBS AG, Robert Davis of Toronto Dominion Bank, and Anne Dennison of Mitsui. The chances of the only 6 participants ever to join the LBMA Silver Price auction being 6 of the 8 banks which were represented on the LBMA Management Committee when they signed up, is infinitely small.


Gates and Obstacles to Wider Participation crafted from Day 1 in August 2014

On August 15, a document titled Commodities Benchmark Methodologies: LBMA Silver Price was published under the name of Thomson Reuters, the administrator of the new LBMA Silver Price benchmark. Some of this was covered in a section of the BullionStar blog post “Chinese Banks as direct participants in the new LBMA Gold and Silver Price auctions? Not so fast!“, but is critical here to understand which entities can and can’t participate in the Silver auction.

This Silver Price methodology guide was jointly written by the LBMA, Thomson Reuters, and the CME Group and discusses the methodology that the three groups have established for the silver price benchmark, including the criteria that qualifies an applicant to be authorised as a silver auction participant.

This LBMA Silver Price Methodology document states that:

 “Participation in the auction is open to all silver market participants who meet the following conditions:

  1. meet the Benchmark Participant criteria set out by the LBMA
  2. meet the Participation criteria set out by Thomson Reuters as the Administrator
  3. meet the requirements set by CME Benchmark Europe Ltd to use the technology platform and

participate in the auction market place.

The market participants are accredited by the LBMA; access to the auction platform is approved by CME Benchmark Europe Ltd.

It’s important to look at each of these three sets of criteria/requirements as these criteria/requirements are the basis under which the LBMA plays the role of gatekeeper in deciding which applicants to allow to join the new silver auction process. It’s also important to note the distinction between participant criteria and participation criteria:

The LBMA’s Benchmark Participant criteria

In a section titled “Benchmark Participant criteria”, the document states:

  • A participant has to be a Full Member (Ordinary or Market Making) of the LBMA.
  • The participant also needs to have a Loco London Clearing account.
  • Applicants to be a Full LBMA Member must demonstrate that they:
  • actively trade spot, options or forwards in the London Bullion Market
  • Pass KYC (know your customer) procedures
  • Declare conformance with the Non-Investment Products Code
  • Applications are subject to review and ultimate approval by LBMA
  • The participant has to accept and implement the Thomson Reuters LBMA Silver Price Participant Code of Conduct
  • Participation is additionally subject to the requirements set by CME Benchmark Europe Ltd for use of the technology platform and for participation in the auction (e.g., in respect of credit arrangements)

In a further section titled “Accreditation of Participants” the document states:

  • Participants will be accredited by the LBMA based on the Benchmark Participant Criteria
  • Accredited Price Participants will be listed separately on the LBMA website

There is no reference in the Thomson Reuters document to the phrase to the concept of ranking participants based on ‘credit ratings’ or ‘credit scores’ as Jack Allen of CME stated in the CME webinar when he said “LBMA Market Makers with consistent and constant bilateral credit facilities“.

Note that all of the market-making members of the LBMA already meet the LBMA’s benchmark participant criteria and just need to receive formal LBMA authorisation and sign up to the CME’s platform and participation requirements.

Thomson Reuters’ Participation Criteria

Thomson Reuters’ participation criteria refer to the fact that “all participants are required to adopt the LBMA Silver Price Participant Code of Conduct. This is addressed in a section titled “Benchmark Participant Codes of Conduct”.

CME Benchmark Europe Ltd Requirements

The CME Benchmark Europe Ltd also has requirements which participants must adhere to. These requirements relate to the use of the technology platform and to participating in the auction.

One participation requirement cited in the document is “in respect of credit arrangements”. These credit arrangement refer to the bi-lateral credit lines between the participating bank in the auction.

According to the methodology guide, the auction platform also has a credit screener built-in which ensures “that an order entered by a participant will not result in that participant exceeding their pre-set credit limit”.

Auction participants also need to sign the CME Benchmark Europe Ltd Participation Agreement.


Limitations of the Silver Price Auction in terms of IOSCO

The most obvious limitation of the LBMA participant criteria is that auction participants are required to be Full Members of the LBMA, and so the auction is not representative of the global Silver Market.

The IOSCO benchmark principles state that a benchmark should be a reliable representation of interest, i.e. that it should be representative of the market it is trying to measure. Interest is measured on metrics such as market concentration. In the Thomson Reuters methodology document, on page 11 under benchmark design principles, the authors estimate that there are 500-1000 active trading entities in the global silver market.

4.2 Financial Benchmarks Design Principles

Reliable representation of the interest:

“Market concentration Estimated ~500-1000 active trading entities; an estimated 5 market markets at launch date rising to approximately 15 spot market makers in the auction.”

Yet there are only 75 full members of the LBMA, 61 of which are Ordinary members, and some of these ordinary members are just logistical and infrastructure type entities. Even the 66 Associates and 9 affiliates of the LBMA cannot even apply to participate directly in the Silver auction. Therefore, due to the strict auction participant criteria, a handful of LBMA market-makers are being assigned to globally represent the 500-1000 active trading entities. The Methodology document also foresaw 15 spot market makers in the auction. Where too are these 15 spot market makers?


The IOSCO benchmark design principles, page 11, also recommend measuring a metric called “relative size of the underlying market in relation to the volume of trading (the volume of trading that is being used to form the benchmark)”.

iii. Relative size of the underlying market in relation to the volume of trading

Volumes in the LBMA Silver Price auction are a fraction of the daily volume traded in the silver futures and OTC markets

The Thomson Reuters methodology document admits that “volumes in the LBMA Silver Price are a fraction of the daily volume traded in the silver futures and OTC markets”.

The first day of the LBMA Silver Price auction only saw a net 525,000 ounces of silver offered and a net 325,000 ounces bid. Since the CME group and Thomson Reuters don’t provide any other volume data beyond this net data, on face value this looks like a miniscule amount of silver compared to global daily silver trading, and it not representative of anything in particular. Net auction volume data is not useful without the pyramid of gross trade data that may or may not lie underneath it.


All for One and One for All

Finally, since this article started with the Statement jointly issued by Thomson Reuters, CME Europe and the ‘Independent’ Silver Price Oversight Committee, let’s look at what exactly these 3 entities are.

The new LBMA Silver Price is therefore being ‘run’ by a combination of three entities, namely, the LBMA, CME Group and Thomson Reuters, but more specifically, the LBMA, CME Benchmark Europe Ltd. (“CMEBEL”), and Thomson Reuters Benchmark Services Ltd. (“TRBSL”).

There is now an extensive disclaimer on the LBMA website addressing the LBMA Silver Price (which obviously wasn’t there during the time of the London Silver Market Fixing Limited company). Given the involvement of the three parties, LBMA, CME and Thomson Reuters, together they now comprise the ‘Disclaiming Parties’. The introduction of this (long) disclaimer is as follows:

LBMA Silver Price (“Benchmark”) is owned by The London Bullion Market Association (“LBMA”), calculated by CME Benchmark Europe Ltd. (“CMEBEL”) and administered by Thomson Reuters Benchmark Services Ltd. (“TRBSL”).

None of LBMA, CMEBEL, TRBSL, their group companies, nor any of their or their group companies’ respective directors, officers, employees or agents (collectively the “Disclaiming Parties”) shall be liable in respect of the accuracy or the completeness of the Benchmark or the market data related thereto (“Market Data”) and none of the disclaiming parties shall have any liability for any errors, omissions, delays or interruptions in providing the Benchmark or market data.”

So who are CEMBEL and TRBSL?


Thomson Reuters Benchmark Services Limited

The administrator of the LBMA Silver Price process is a freshly established subsidiary of Thomson Reuters called “Thomson Reuters Benchmark Services Limited” (TRBSL).

Thomson Reuters Benchmark Services Limited is a private limited company, company number 08541574 which was incorporated on May 25, 2013, but only really ‘launched’ in March 2014. TRBSL has a registered address of “The Thomson Reuters Building, 30 South Colonnade, Canary Wharf, London E14 5EP”.

Initially the directors appointed to TRBSL were legal and compliance staff from Thomson Reuters including David Mitchley, Global Compliance Controller. From October 2013 onwards these directors were replaced by other directors from Thomson Reuters, namely Peter Moss, Head of Trading, Mark Beaumont, Global head of Treasury, John Cooley, Global Head of Indexes and Reference Rates, and Philip Wellard, Head of Transaction Services. TRBSL was then publicly launched in March 2014 via various press releases. Philip Wellard resigned from TRBSL in May 2014.

Mark Beaumont was a director of TRBSL all the way through the LBMA consultation and selection process but then dropped off the director list on July 17 2014, a few days after the LBMA had selected Thomson Reuters to administer the auction. On July 17 2014, another Thomson Reuters executive, Stephen Turner, Global head of Planning and Deployment, Real Time Technology, was appointed as a director of TRBSL. Julian Day, Global Head of Fixing Operations at Thomson Reuters was appointed to TRBSL in October 2014, Peter Moss dropped off in March 2015, Tobius Sproehnle, Global head of Benchmark Services at Thomson Reuters was appointed to TRBSL in June 2015, and interestingly, the company’s Auditor resigned on 1 October 2015. Why would the auditor have resigned?

Thomson Reuters established TRBSL so as to have a separately governed and registered entity to provide benchmark services. This was partially done for compliance reasons in light of regulatory guidance and client expectations in the wake of the LIBOR scandal, when regulators took action against some of the banks that contributed to BBA LIBOR. TRBSL is now regulated by the FCA.

LIBOR had been administered by BBA LIBOR Ltd and calculated and published by Thomson Reuters. John Ewan (see below), a director of BBA LIBOR Ltd, left BBA LIBOR Ltd in 2012 and joined Thomson Reuters as Head of Fixings Business Development, and worked with Mark Beaumont on promoting the benchmark calculation and publication services of Thomson Reuters (see below). Ultimately, the senior people listed above are responsible for the LBMA Silver Price given that they are directors of TRBSL.

Note that LIBOR is now a regulated benchmark and regulated by the FCA since April 2015. ICE Benchmark Administration is the administrator of ICE LIBOR and also oversees the methodology and calculation process of this benchmark.


CME Benchmark Europe Limited

CME Benchmark Europe Ltd is a newly incorporated legal entity, purely set up for the LBMA Silver Price. CME Benchmark Europe Ltd (CMEBEL) is a private limited company, company number 09165067, which was only incorporated on 6 August 2014, a week before the new LBMA Silver Price auction went live.

On 6 August 2014, CEMBEL had a registered address of “3 More London Riverside, London SE1 2AQ”, which is the same address as law firm Norton Rose LLP, located near London Bridge Station. The secretary of the company is “Norose Company Secretarial Services Limited”, also of 3 More London Riverside, London SE1 2AQ. Norton Rose acts as outside legal counsel for CME Europe.

On 6 August 2014, the sole director of the company was Clive Weston, 3 More London Riverside, London SE1 2AQ. Clive Weston is listed with an occupation of company secretary. On 7 August 2014, the registered office of CME Benchmark Europe Ltd was re-registered to 4th Floor, One New Change, London EC4M 9AF, which is CME’s London headquarters office.

On 1 October 2014, two Appointment of Director forms were filed with Companies House on behalf of CMEBEL, appointing two CME employees as directors of CMEBEL. These forms were backdated to 6 August 2014. So, technically, the CME auction was being run for over six weeks by a company that had only one director and this director was a company secretary employed by law firm Norton Rose, who was not a direct employee of the CME Group. The forms filed on 1 October 2014 appointed William Knottenbelt and Adrienne Seaman as directors of CMEBEL. William Knottenbelt is CEO of CME Europe. Adrienne Seaman is CME Group associate general counsel for EMEA.

In February 2015, Richard Bodnum, md Tax, Jill Harley, md Corp Fin Services and Harriet Hunnable (Global Head of Precious Metals) were appointed to CMEBEL, with Bodnum and Harley both stepping down as directors in June 2015, after which Thomas Krabbe, director of Corporate Finance and Development and Julie Winkler, md Research, Product Development, were appointed as directors the same month, and Gavin Lee was appointed as a director in September 2015. On 11 December 2015, Harriet Hunnable’s directorship of CMEBEl was terminated, since she left the CME Group at that time.

CME Europe Benchmark Limited performs the roles of ‘auction platform operator’ and ‘calculation agent’ for the LBAM Silver Price. Immediately prior to each daily auction the ‘operator’ performs a calculation on diverse CME market data silver price sources in order to establish an opening or seed price that starts the whole auction process. CME Direct is used as the auction platform. This is an electronic trading platform for trading OTC and exchange traded markets.

According to Thomson Reuters, “the calculation agent is a legal entity with delegated responsibility for determining a benchmark through the application of a formula….with the methodology set out by the administrator”.

CME Europe Benchmark Limited also has an ‘Auctions Market Team’. This team is part of the CME Global Command Center (GCC) some of whom are located in the CME’s London office at One New Change in the City of London.

Additionally, according to the LBMA Silver Price methodology paper “CME Benchmark Europe Ltd will conduct limited monitoring of live auction activity for suspicious bids, offers, or trades.” As to why this monitoring of live auction activity is limited and not constant is not addressed by the administrator, Thomson Reuters.


‘Independent’ Silver Price Oversight Committee

You may recall that the statement on the LBMA Silver Price issued on 4 February was issued by Thomson Reuters, the CME Group and “the independent Silver Price Oversight Committee”. Who and what is this independent committee?

In March 2015, I asked Thomson Reuters by email as to who was on this committee. The question was precipitated by the fact that the LBMA Gold Price, administered by ICE Benchmark Administration (IBA) had just launched the LBMA Gold Price (on 20 March 2015) and had appointed its Oversight Committee. The Silver Price methodology guide had referred to a LBMA Silver Price Oversight Committee, but it did not explain who was on such as committee or whether it actually existed in practice.

Thomson Reuters replied to me in March 2015 that:

“Yes we are pleased to confirm there is an LBMA Silver Price Oversight Committee, as mentioned in our methodology guide. We will release the committee members names in due course (we have not yet made them public) and committee procedures will be in full compliance with all FCA requirements when silver becomes an FCA-regulated benchmark on April 1.” [2015]

This list had still not been published on the Thomson Reuters website by September 2015, as this Archive (Wayback) link makes clear. So 6 months after Thomson Reuters said they would release the list ‘in due course’ it still wasn’t on the website. The list was eventually published sometime between September and December 2015.

Fast forward to the end of January 2016 when the embarrassing LBMA Silver Price auction took place, and this was probably the first time in quite a while that Thomson Reuters and CME Group and LBMA had actually given any thought to the ‘Independent Oversight Committee’. For in a google cache link from 29 January, it still listed a version of the Committee list with Harriet Hunnable listed as the CME Group representative, and Harriet Hunnable left the CME Group in December 2015, as explained above, and as Reuters reported:

CME Group Inc’s executive director for metals products, Harriet Hunnable, will leave the company later this month, a CME spokesman said on Wednesday.

Where does Hunnable’s departure from CME leave all of the improvements of wider participation and central clearing for the LBMA Silver Price that she promised the attendees during those 2 webinars in July and August 2014?


You can see a Bing cache of this page from 24 January 2016 here. Bing sometimes has its uses. It was only after the suspect price auction on 28 January that the named CME representative was amended on the list from Harriet Hunnable to Gavin Lee, suggesting that no one even noticed the out of date information until Thomson Reuters realised that there were lots of eyes looking for this list. Importantly, there are NO published minutes of ANY meetings held by this LBMA Silver Price Oversight Committee, ever. Contrast that to the LBMA Gold Price Oversight Committee which has published minutes of 6 of its meetings since 27 February 2015.

As the 4 February ‘joint statement’ at the top of this article said:

“In addition to its regular meetings, the [Silver] Committee has held two extraordinary meetings since the auction on Thursday January 28, 2016″

So, where are the minutes for these meeting and for any of the ‘regular’ meetings, which obviously hadn’t taken place at least since Harriet Hunnable left CME Group in early December 2015.

Lets look at these 8 individuals on the Silver oversight committee?

Gavin Lee is head of benchmark services at CME. Courtney Lynn is treasurer at Coeur Mining. She also says in her Linkedin profile that she is on the “LBMA Silver Price Oversight Committee” and joined this committee in April 2015, and that the “LBMA Silver Price oversight committee reviews and maintains the definition, setting, scope and methodology of the LBMA Silver Price benchmark.” This is the same Courtney Lynn of Coeur Mining who told Bloomberg in August 2014 in relation to new LBMA Silver auction, that:

“We hope to have the opportunity to become a direct participant down the road and look forward to working with the LBMA, CME and other silver producers to drive the evolution of this market.”

Hope springs eternal….because with price manipulation in the Silver auction, and Mitsui now departed from the Silver auction, it looks like the evolution of the market is being driven backwards rather than forwards. Even being on the Oversight Committee doesn’t seem to be enough for the LBMA to allow Coeur to become a direct participant in the LBMA Silver Price auction.

The “Neil Stocks”, who is “Independent chairman” of this committee, appears to be the Neil Stocks who is global head of compliance at UBS. There can’t be many “Neil Stocks” in London that fit the role of being able to be appointed as chair of a Silver Price oversight committee, but Thomson Reuters doesn’t see fit to ascribe Neil Stocks to any organisation, presumably because that would make him less independent. If it is the Neil Stocks from the infamous precious metals manipulator UBS (that made clear attempts to manipulate the prices of precious metals), than that is not independent since UBS is one of the 5 remaining direct participants in the Silver auction. Sakhila Mirza is the general counsel for the LBMA and a member of the LBMA Gold Price Oversight Committee.

Now we come to the infamous John Ewan from Thomson Reuters, and remember that Thomson Reuters is the officially retained administrator of the LBMA Silver Price benchmark. This is the same John Ewan who worked at the British Bankers Association and was managing director of BBA Libor Ltd (surely with oversight?) and was subsequently referred as Mr Libor. This is also the same John Ewan, who according to the Wall Street Journal article from 2012:

assured participants that the BBA had rigorous quality-control measures to prevent any problems, the minutes indicate” and “advocated further expansion, touting the potential revenue from broadening Libor’s reach”

 This is also the same John Ewan whose senior at Thomson Reuters, wrote a letter in Q4 2012 introducing Ewan to benchmark contributor associations:

I am writing to introduce myself and some key contacts at Thomson Reuters, to provide an update on our recent activities with regard to benchmark fixings and to make some proposals to improve fixings to the advantage of both you as a sponsor and partner as well as the broader market and end users of the data.”

There has been regulatory action taken against contributors to BBA LIBOR, by authorities acting in co-ordination.  Regulators and other authorities have announced inquiries, consultations and other actions”

Thomson Reuters has unrivalled experience in calculating and publishing fixings and benchmarks.

We invest in teams of experts, close to key markets, who specialize in the collation, calculation, publication and onward distribution of fixings content. These teams can also provide the specialist   analysis and reporting required to guide your decisions on potential changes, challenges to contributors and process improvements.”

In short we are passionate about fixings and proud to provide a service which assures data of the highest quality.

The global regulatory community is currently focussing on BBA LIBOR.

Please address any correspondence to either John Ewan, whose contact details are below, or directly to myself.

John Ewan, Head of Fixings Business Development, Thomson Reuters, The Thomson Reuters building, South Colonnade, London E14 5EP, Email:    john.ewan@thomsonreuters.com

“We believe that accurate well-governed benchmarks, fixings and indices are vital tools that allow market participants to have confidence that markets are clean and efficient and we welcome any level of debate on the topic.

Mark Beaumont, Global Head of OTC Market Content, Thomson Reuters, mark.beaumont@thomsonreuters.com

The final 3 committee members are Martyn Smith, bullion development manager at The Royal Mint, Bernhard Fuchs, senior vp at Umicore, Simon Weeks, md at Scotiabank, who is also former chairman of the LBMA, former chairman and director of the London Gold Fixing, former chairman of the London Silver Fixing etc.


Conclusion – Can’t get Fooled Again?

Such a strong Libor scandal to LBMA Silver Price connection in the form of Mr. Libor becoming ‘Head of Fixings’ business development at Thomson Reuters is in my view problematic, even from an image point of view. You could not make this up. The guy in charge of BBA Libor is now the Oversight Committee representative of the Administrator of the LBMA Silver Price benchmark, a benchmark which trust in is rapidly disappearing, just like the trust in Libor evaporated. It also brings to mind the famous George Bush junior quote, when he said:

“There’s an old saying in Tennessee — I know it’s in Texas, probably in Tennessee — that says, fool me once,… shame on.. — ..shame on… you. Fool me,.eh,. — you can’t get fooled again!”

Furthermore, what happened to “increased direct participation” as Ruth Crowell said was needed, and what happened to her interest in having 25% of 444 participants (or 111 participants) come on board?

Why was there an initial rush in 5 weeks in July-August 2015 that pressured the CME Group to come up with a rudimentary system that could not handle central clearing, and yet 18 months later there has been no evolution of the system?

Why was there mis-leading evidence from the LBMA, CME Group and Thomson Reuters in July-August 2014 that wider participation and central clearing would happen in the Silver auction and then these developments never happened? Who leaned on CME to back off on central clearing?

Why is the joint statement from Thomson Reuters, the CME Group and the ‘Independent’ LBMS Silver Price Oversight Committee referring to wider participation and central clearing as if it was a fresh plan, when in fact it was the original plan in July – August 2014 that got pushed to one side. And why did it get pushed to one side. Cui bono?

Why is the LBMA giving an advantage to the bullion bank participants in the LBMA Silver Price auction by perpetuating a system where direct participants are required to maintain bilateral credit limits?

Where is the Financial Conduct Authority in all these developments and why has it not made any statement? Remember, the LBMA Silver Price is now a Regulated benchmark.

Where are the Chinese banks that said that they wanted to become direct participants in the LBMA Silver Price auction?

Which trading entity was putting massive and increasing sell orders into the midday Silver fixing on 28 January?

These are just some of the questions that remain outstanding in what has surely been the most suspicious financial benchmark launch of all time.