Gold Benchmarks Said to Be Reviewed in U.K. Rates Probe
The FCA review is preliminary and hasn’t risen to the level of a formal investigation, said the person, who asked not to be identified because the matter isn’t public. The person declined to say which gold benchmarks were under scrutiny.
One of the key benchmarks is the London gold fixing, a measure of the spot price for physical gold that is set twice daily by five banks. At private Commodity Futures Trading Commission meetings this year, the U.S. derivatives regulator discussed reviewing how gold benchmarks are set, according to a person with knowledge of the matter.
“We’ve seen a pattern of this sort of scrutiny across markets,” said Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. “I don’t think this will have a big price impact in gold, but it could change the way markets are traded.”
Regulators around the world are examining alleged abuses of a number of financial benchmarks by companies that play a central role in setting them. Inquiries were triggered after it emerged the London interbank offered rate, or Libor, the benchmark interest rate for more than $360 trillion of securities worldwide, was being manipulated.