WGC calls meeting to reform London Gold Fix

The World Gold Council (WGC) intends to explore reforms to the London Gold Fix in an effort to modernise the system.

The organisation, which is the market development body for the gold industry, announced it will host an industry discussion forum to discuss potential changes.

According to the WGC, the Financial Conduct Authority will be in attendance as an observer, while a number of representatives from all corners of the sector are expected to participate.

Bullion banks, ETF and other gold investment product sponsors, central banks, mining companies and industry bodies will all be invited to the first meeting, which will take place on July 7 in London.

The fix, as it is often abbreviated, is a global pricing benchmark that is set twice daily following a conference phone call between four major banks. A standard price is decided based on their clients’ transactions.

Managing Director of Central Banks and Public Policy at the WGC Natalie Dempster said making amendments to the fix is long overdue.

“The fixing process was established almost a century ago, so it is not surprising that it needs to change to meet today’s market expectations for enhanced regulation, transparency and technology,” she explained.

“Modernisation is imperative in order to maintain trust across the industry. This could come in the form of reform to the fix to bring it in line with the IOSCO principles or it could see an alternative price benchmark emerge.”

One of the key changes the WGC highlighted is making the fix more representative of the physically deliverable price of gold. This is because many people buying gold now ask for delivery of their precious metals.

Other issues include basing the fix on executed trades rather than quote submissions, and making input data highly transparent, published and open to audits.

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