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LONDON, Feb 4 (Reuters) - Thomson Reuters TRI.TO and CME
Group CME.O introduced a package of measures on Thursday to
further develop the silver benchmark, including the option of
suspending the process if administrators believe its integrity
is threatened.
The benchmark's oversight committee has held two
extraordinary meetings since last Thursday, when the LBMA silver
benchmark settled more than 80 cents below the spot price.
Traders expressed concern after the auction that it was too
easy for the benchmark to deviate from the current spot price.
The companies, who act as benchmark administrator and
calculator respectively, said they had been working with the
committee to address concerns. The Financial Conduct Authority
(FCA) has been kept fully informed, they added.
New measures agreed between CME and Thomson Reuters, along
with intellectual property holder the London Bullion Market
Association (LBMA), include the suspension of the price-setting
process if the administrators believe the integrity of the
auction or participants is threatened.
They are also aimed at increasing the participation in the
auction of firms that are not banks.
"This protocol has been in place since Friday January 29,
2016. All participants and the FCA have been informed of its
implementation," the companies said.
"In addition we look at the viability of introducing
centralised clearing of all auction trades, to make the process
easier and less capital intensive for participants."
The committee, Thomson Reuters and CME Group will present
details of the measures to participants, their clients and the
FCA for discussion and implementation at the earliest
opportunity, they said.
These may include a blind auction, where only prices and not
volumes are disclosed to participants until after the auction
has closed, and increasing the settlement tolerance where
necessary to maintain the integrity of the auction.
Also on the table is a package of measures to increase
participation in the benchmark process and to encourage
non-banks' participation, the companies said.