ICE delays launch of clearing for London gold benchmark - sources

By Peter Hobson and Pratima Desai

LONDON, March 21 (Reuters) - Intercontinental Exchange (NYSE: ICE - news) (ICE) has delayed the launch of clearing for London's benchmark gold price because not all participants in the auction will be ready, two sources involved in the process said on Tuesday.

The delay could weaken its bid to become the dominant exchange in London's $5 trillion-a-year bullion market, sources say.

ICE had already pushed back the start of clearing to April 3 to allow the 14 banks and brokers that participate in the auction time to get necessary IT and back-office systems in place.

However, the two sources told Reuters that ICE had again delayed and there was now no set start date.

"They've had to delay it for a couple of weeks. All the big players aren't ready," one of the sources said. "They may have to push the timetable out again."

The sources did not say which participants were not ready.

ICE declined to comment.

ICE, the London Metal Exchange (LME) and CME Group (Kuala Lumpur: 7018.KL - news) are all launching cleared London gold contracts this year, hoping to gather new business as tighter regulation raises the cost of trading off-exchange.

With (Other OTC: WWTH - news) trading activity expected to concentrate on one exchange, 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.

CME launched a contract in January but it has so far struggled to attract business.

The LME, owned by Hong Kong Exchanges and Clearing Ltd , will launch its own contracts, backed by a group of gold-trading banks, on June 5.

Sources earlier told Reuters that Societe Generale (Swiss: 519928.SW - news) , Standard Chartered (BSE: 580001.BO - news) , ICBC Standard Bank and China Construction Bank would not be ready to clear the LBMA auction in time for April 3. (Editing by Susan Thomas)