06/10/2014 - 14:57

Perth research catches gold manipulators

06/10/2014 - 14:57

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A University of Western Australia doctoral student has found major banks were exploiting price sensitive information through the London Gold Fix and has predicted the demise of the system before the end of the year.

Perth research catches gold manipulators
The London Gold Fix is used as a benchmark price for setting gold contracts around the world.

A University of Western Australia doctoral student has found major banks were exploiting price sensitive information through the London Gold Fix and has predicted the demise of the system before the end of the year.

Andrew Caminschi, who published on the topic with Winthrop Professor Richard Heaney, said that gold fixings may become electronic by the end of the year, going the way of the London silver market.

Barclays has been fined $44 million for manipulation of the gold fixing benchmark, and Deutsche Bank has dropped out of the gold fixing mechanism entirely.

Mr Caminschi said his analysis had observed clusters of trades before the announcement of the fix price, conducted by companies represented on the panel during fixing.

“The manipulation of commodity benchmark prices affects a broad range of stakeholders,” he said.

“The industry transition from highly concentrated pricing clubs to such as the London Fixing, to its more transparent successor, the LBMA Silver Price, is welcome news.”

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