The FCA Dives into the London Gold Fixing’s Intricacies

by on April 25, 2014 3:59 am BST

The Financial Conduct Authority (FCA) is diving deeper into the London gold fixing, which is a twice-daily conference of five international banks to determine the price for spot gold.

The British regulator recently visited Societe Generale, one of the five members, in order to observe the London fixing. “the FCA is clearly trying to educate itself on the mechanics of benchmark-setting in the gold market,” said Simon Hart, a lawyer at RPC LLP. The visit is an indication that the FCA is watching how gold fixing, which has been alleged to be manipulated, is conducted.

The FCA does not have jurisdiction of the gold market, but the regulator does oversee derivatives, such as exchange-traded funds (ETFs). Visits to the other four banks (Deutsche Bank, Nova Scotia, Barclays, and HSBC Holdings) by the FCA are expected.

The London gold fixing has come under scrutiny as unusual trading patterns have been mapped out around the times of the twice-daily conferences at 10:30 AM and 3 PM. Such trading patterns have been published by Rosa Abrantes-Metz, a professor at New York University’s Stern School of Business.