The World Gold Council will host a "discussion forum" starting July 7 regarding the future of the London gold pricing mechanism, the industry body said Wednesday.
"The first meeting will be held July 7 in London. The Financial Conduct Authority will be attending as an observer and representatives of the bullion banks, refiners, ETF and other gold investment product sponsors, exchanges, industry bodies, central banks and mining companies will be individually invited to participate," a statement said.
The forum comes in the wake of news that the London silver fix is set to cease in its current form as of August 14, on the back of increased regulatory scrutiny.
Natalie Dempster, managing director, central banks and public policy at the WGC said: "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.
"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."
Dempster said the WGC's objective in convening the forum "is to ensure that the full range of analysis and market perspectives from all parts of the gold supply chain are debated, understood and brought to bear on any potential changes. Any reform or replacement of the Fix, must serve the needs of all market participants and meet today's requirements for transparency, liquidity and independent oversight."
Following discussion with a number of industry participants, the WGC has identified five principles to which any reformed fixing process -- or alternative process -- should adhere to.
1. It should be based on executed trades, rather than quote submissions;
2. It should be a tradeable price, not simply a reference one;
3. The input data should be highly transparent, published and subject to audit;
4. It should be calculated from a deep and liquid market, through which a significant volume of gold flows are transacted;
5. It should represent a physically deliverable price, as many users want to take physical delivery of gold.
