And then there were 2: Deutsche exit renews scrutiny of silver fix
By Frank Tang
NEW YORK, April 30 (Reuters) - Deutsche Bank's exit from the London precious metal fixes will leave just two banks running a century-old system that sets the global silver price, likely stirring the debate about regulation of one of the most volatile commodity markets.
The bank's decision to resign its seat ends an unsuccessful four-month search for a buyer, as U.S. lawsuits alleging gold price-rigging by the five banks that set the benchmark turned potential suitors cold, sources said.
Scotiabank and HSBC, the only remaining members of the silver pricing committee, will likely face renewed scrutiny of a daily system whose roots go back to the smoky, boisterous coffee houses of 19th-century London.
The modern process, which started in the 1960s, is now run by telephones and is largely similar to the twice-daily gold fix.
"This will lend it to more scrutiny over manipulation," said a senior precious metals trader at a mid-sized bank who has worked on Wall Street for 20 years and uses both fixes.
Squeezing billions of dollars of business through a handful of banks that match off orders to arrive at a benchmark price over the phone is seen by detractors as anachronistic and opaque.
Supporters of the fix say the number of members may be shrinking but that order volume that contributes to setting the final price is still healthy.
On Tuesday, Britain's financial watchdog, the Financial Conduct Authority (FCA), said it could intervene if there are too few participants in commodity benchmarks such as gold and silver. Continued...