LBMA asks for bids to provide gold trading, clearing services

(Updates with comments, background)

By Clara Denina

LONDON, Oct (HKSE: 3366-OL.HK - news) 9 (Reuters) - The London Bullion Market Association (LBMA) said on Friday it has formally asked exchanges and technology firms to bid for services such as a gold exchange or a clearing platform to make the London market more transparent and liquid.

"This is to investigate opportunities for greater market transparency through, for example, trade reporting and also increased trading efficiency via enhanced IT (Other OTC: ITGL - news) solutions," the LBMA said in a release.

Following 2014's shake-up of precious metals benchmarks, the LBMA commissioned consultancy EY to review the bullion market with a view to enhancing transparency and liquidity, while reducing costs.

"The review came up with a number of potential solutions," an LBMA spokesman said.

"We don't know what specific services each provider could offer, (but) we need to make sure the chosen solution is workable for the whole market," the spokesman said, adding that the companies invited to bid would be the same as for the benchmarks in 2014.

The group that the LBMA has set up to decide on the winning bid is made up of market makers including HSBC and JP Morgan (Other OTC: MGHL - news) and other banks involved in the bullion market as well as other firms.

London's bullion benchmarks, or fixes, were overhauled last year as regulatory scrutiny made price-setting among a handful of banks untenable.

Some 13 companies had participated in the bidding process to run the gold benchmark, which was won by U.S (Other OTC: UBGXF - news) . derivatives bourse Intercontinental Exchange (NYSE: ICE - news) via a subsidiary. ICE declined to comment on its intentions in the bidding process.

The London Metal Exchange secured the administration of the platinum and palladium benchmarks and said it was looking at launching precious metals derivatives.

The LME declined to comment.

The Chicago Mercantile Exchange, jointly with Thomson Reuters (Dusseldorf: TOC.DU - news) , runs the daily silver price auction . Thomson Reuters declined to comment and no one at the CME was immediately available.

Technology provider Autilla, which also bid for the benchmarks last year, said it is interested in submitting a proposal.

"If anybody is looking for solutions to provide more liquidity to the market, a specialised tailor-made electronic platform to trade bullion would be successful," said Autilla chief executive Mike Greenacre.

Currently, more than $5 trillion a year of gold transactions are made over the counter as opposed to a centralised exchange. (Reporting by Clara Denina, editing by Pratima Desai and Adrian Croft)