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The silver market has cause for concern...

This Friday sees Thomson Reuters and CME roll-out of their new fixing engine and market participants are understandably clueless about how it works less than three days before it goes live. With the traditional fixing members have stepping away, it remains a mystery who will be taking the fix orders - with a deafening silence from market participants.

Oddly, if you can identify who your orders are to go through, then you have to get the calculator out because Reuters advise that prices are no longer in US dollars per ounce but US dollars per "lakh" or 100,000 ounces ... why ?

The Reuters 'explainer' goes on to state that if the fix is within a 300,000 tolerance then it will fix ... so what happens to the residual amounts - especially if no one steps up to be a "participant" ? And do all the new participants or "fixing members" as they were formerly called all have bilateral credit arrangements so those deals can settle ? I have no

Meanwhile the design looks quite retro in a DOS sort of way - Clive Sinclair would be impressed - with catchy descriptors like "quote:LDNXAGAUC1" to enter presumably your orders ...  see below ... and cry.

If you would like to follow the fixing process then you simply need to purchase a subscription to the Reuters Eikon system adds Reuters winningly ... hmmm.

Asked to describe the system one dealer said rather prosaically "we were advised we would be getting a workable solution, well using a pitchfork to wipe my backside might be described as a workable solution but its hardly elegant or efficient - like this platform". Meanwhile one is left to ponder whether this has done anything to address the requirement for efficiency and transparency. 

Ross Norman

12 Aug 2014

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