* Existing silver benchmark to cease on August 14
* Participants want more contributors, electronic system
* LBMA invites proposals from potential administrators
By Jan Harvey and Clara Denina
LONDON, June 5 (Reuters) - Silver market players are in favour of an electronic, auction-based system for setting a benchmark price with a broader base of contributors when the 'fix' ceases in August, the London Bullion Market Association (LBMA) said on Thursday.
The LBMA has been consulting market participants on a potential replacement for the daily silver 'fix' since its operator said in May it would stop administering the 117-year-old process.
HSBC, Deutsche Bank and Scotiabank currently set the price once a day via a conference call.
Citing the results of a survey, which attracted 440 participants, the LBMA said: "The general consensus was that the silver pricing mechanism should be an electronic, auction-based solution. The solution must be tradeable, with an increased number of direct participants."
LBMA Chief Executive Ruth Crowell said the association had launched a request for proposals from all companies who had expressed an interest in administering the silver price benchmark.
Members of the association, which include the current fixers and other large bullion-trading banks such as JPMorgan and UBS, would provide feedback on the proposals at a seminar on June 20, she said.
The Chicago Mercantile Exchange (CME) and the London Metal Exchange (LME) both said last Thursday they were working with the LBMA and the industry to find an electronic-based solution.
Industry sources said commodity price benchmarks provider Platts and news agency Thomson Reuters are also in talks with the LBMA, while ETF Securities told the Financial Times on Wednesday that it was also interested in setting the benchmark.
A number of technology providers are investigating ways to offer a more transparent way of disseminating information that shows how the price of the $3.5-billion-a-day silver trade is settled.
The move to disband the silver fix came after Deutsche Bank, a member of the gold and silver fix for two decades, failed to attract a buyer after putting its seats up for sale in January.
At the start of each fixing, the chairman announces an opening price to the other members, who relay this to their customers and, based on orders received, then instruct their representatives to declare themselves buyers or sellers at that price.
Reporting by Jan Harvey; Editing by Veronica Brown and Jason Neely