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ICE delays takeover of London's silver benchmark to Oct 2
[LONDON] ICE Benchmark Administration, a unit of Intercontinental Exchange (ICE), will take over as operator of London's silver benchmark on Oct 2, a week later than planned, the exchange said on Thursday.
Two current participants in the benchmark, Swiss bank UBS and China Construction Bank (CCB), are not featured in the line-up of entities taking part in the new benchmark process.
ICE said brokers INTL FCStone and electronic traders Jane Street Global Trading would join, adding the delay in taking over the benchmark was to ensure all participants were ready.
ICE was selected to run the LBMA Silver Price in July, proposing an electronic auction with central clearing that it said would help to expand participation.
More participants could help stabilise the benchmark, which under current administrators Thomson Reuters and CME Group has diverged widely from the spot silver price on a number of occasions due to low volumes and inflexible trading policies.
ICE said that from Oct 2 HSBC, INTL FCStone, Jane Street, JPMorgan, Morgan Stanley, Bank of Nova Scotia and Toronto-Dominion Bank would take part in the silver benchmark.
UBS and CCB were forced earlier this year to leave London's gold benchmark, which is also administered by ICE, because they did not have systems in place to clear trades when ICE introduced clearing to that process.
CCB intends to re-enter the gold and silver benchmarks once its issues are resolved, said a source familiar with the matter.
UBS is not currently seeking to rejoin, a separate source with knowledge of the matter said.
CCB did not respond to a request seeking comment. UBS declined to comment.
The two banks are likely to send their business to the benchmark through other participants so volumes will be largely unaffected, said a banking source. "Volumes that need to be settled on the benchmark will find their way to the benchmark," the source said. "It is not going to drain liquidity." Several banks that are participants in the gold benchmark but not silver are also expected to join the LBMA Silver Price under ICE, sources said.
INTL FCStone and Jane Street were already involved in the gold benchmark.
Goldman Sachs, another participant in gold, is reviewing the silver benchmark process with the intention of joining, said a source familiar with the matter. Goldman declined to comment.
Other participants in the gold benchmark not currently involved in silver - Bank of China International, Bank of Communications and Industrial and Commercial Bank of China (ICBC) - did not respond to requests for comment.