The news is flashing through the market this morning that the three banks that run the daily London Silver Fix are shutting the operation down. Since 1897, the benchmark price of silver has been set by a conference between three of the largest bullion banks in the world.
An official statement from The London Silver Market Fixing Ltd. announced that the group will stop administering the fixing on Aug. 14, 2014. The three banks on the board are Deutsche Bank, Bank of Nova Scotia, and HSBC.
As international scrutiny over forex (foreign currency exchange) manipulation grows, regulators have started looking into the manipulation of precious metals markets. Deutsche Bank, Germany’s largest bank, announced in January that the nation’s top financial regulator had requested documents relating to DB’s forex operations, and also announced it was retiring from the London Gold and Silver Fix organizations. Attempts by the bank to sell its seats on the exchanges were fruitless, as no other banks wanted to be under the magnifying glass that is being focused on the group.
The United Kingdom’s Financial Conduct Authority has been visiting the five banks of the London Gold Fix, to sit in and listen to the fixing process and take notes. Germany’s top regulator earlier this year declared that the level currency manipulation by the big banks has been bigger than the LIBOR scandal, and included precious metals.