LBMA considering outsourcing GOFO To Avoid Complying with New Regulations

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LBMA considering outsourcing GOFO To Avoid Complying with New Regulations

LONDON, May 15 (Reuters) - The London Bullion Market Association is considering outsourcing the administration of its gold forward offered rates (GOFO) to a third party as it prepares to implement new benchmarking regulations from the International Organization of Securities Commissions (IOSCO).

IOSCO, a global umbrella group for market regulators, detailed a series of principles after the Libor scandal in 2012 with which any institution providing a financial benchmark should comply. The deadline is July 1.

GOFO benchmark prices, for which the LBMA is responsible, are globally regarded as the international benchmark for pricing a variety of bullion transactions and products.

"We have IOSCO coming up, so... our priority in terms of GOFO is making sure it's IOSCO-compliant. We're also thinking about maybe outsourcing the administration of that," a spokesman for the LBMA said on Thursday.

"We're conscious that we're administering it... maybe if we used a third party, that might make the process more independent," he said, without giving further details.

LBMA forward market makers contribute to GOFO -- rates at which contributors are prepared to lend gold on a swap basis against US dollars -- every business day.

The LBMA says the rates provide a benchmark dataset that is used as the basis for some long-term finance and loan agreements, as well as for the settlement of gold interest rate swaps and forward rate agreements.

http://www.metal.com/newscontent/60614_lbma-considers-outsourcing-gofo-administration-to-third-party

Original Thomson-Reuters report here: http://share.thomsonreuters.com/assets/newsletters/Inside_Metals/IM_May_16_2014.pdf

Edited by admin on 11/08/2014 - 06:30

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