* Exchanges working on replacements for silver benchmark
* Silver fix in current form due to end on Aug. 14
* LBMA running consultation with industry on alternative (Adds background, detail on LME, paragraphs 14-16)
By Clara Denina
LONDON, May 29 (Reuters) - Major metal exchanges emerged as contenders in developing an alternative to the London silver price benchmark, or “fix”, after the century-old system for setting the globally recognised price is disbanded in August.
The Chicago Mercantile Exchange (CME) and the London Metal Exchange (LME) both said on Thursday they were working with the London Bullion Market Association (LBMA) and the precious metals industry to find an electronic-based solution.
“We are working closely with the precious metals industry and the LBMA to reduce market disruption by helping to find a robust transaction-based way to set the daily spot price, so the markets can continue to work efficiently and seamlessly,” Harriet Hunnable, CME managing director of metals products, said in a statement.
Meanwhile, the LME said it had received numerous requests from industrial and financial players to provide a new solution.
“The LME ... is working with the LBMA in consulting with the market ... it has defined a robust process for a daily silver price, which will provide best-practice regulatory compliance while maintaining the global position of the London market,” the exchange operator said in a statement.
Earlier this month, London Silver Market Fixing Limited said it would stop administering the benchmark on Aug. 14.
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 replacement after putting its seats up for sale.
Greater regulatory scrutiny is forcing major changes in how all precious metals prices are set, and sources say an electronic alternative to the silver benchmark will probably be applied to the other ‘fixes’.
Industry sources said that commodity price benchmarks provider Platts and news agency Thomson Reuters are also in talks with the LBMA and looking to provide feasible solutions to the market.
Both companies declined to comment.
The LBMA has launched a consultation to find a solution, which will close on Friday. It has asked mining companies, users of the benchmarks, regulators and potential administrators for their views on who the ideal contributors to a revised pricing mechanism would be.
LBMA officials could not immediately be reached for comment.
The LME said, “Our proposed solution will be announced at the appropriate time once the market consultation is complete.”
The exchange currently provides clearing of over-the-counter silver forward rates in conjunction with London clearing house LCH.Clearnet, marked to market using the LBMA forward curve.
The LME operated a 10,000 ounce silver contract in the 1970s, which was suspended the following decade after an attempt by the Hunt Brothers to corner the market sapped all liquidity from the market, a trading source said.
It considered re-launching a silver contract in the 1990s, but struggled against falling demand for the metal from the photography sector and a lack of industry support, the source added.
On Friday, Barclays Plc was the first bank to be fined by the British regulator over attempted manipulation of the 95-year-old London gold market daily “fix”.
The Financial Conduct Authority charged the bank 26 million pounds ($43.8 million) for failures in internal controls that allowed an options trader to manipulate the setting of gold prices. (Additional reporting by Veronica Brown, Silvia Antonioli, Jan Harvey and Josephine Mason; Editing by Susan Thomas and Jane Baird)