| Tue 20 Apr 2004, 9:36 | | Standard may bid for seat on gold fixing committee |
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Standard may bid for seat on gold fixing committee
April 19, 2004
By Sherilee Bridge
Johannesburg - Standard Bank, one of the country's big four banks, had not ruled out a bid for a £1 million (R11.5 million) seat on London's gold fix committee, it said late on Friday.
Standard's comments come after NM Rothschild, the bank that built its name on gold trading, last week shocked the market by saying it was vacating its chairmanship of the gold fix committee after 85 years of overseeing the ritual of setting the benchmark trading price.
Martin Botha, the executive director of Standard Bank in London, said Rothschild still had to go through a formal process in conjunction with the London Bullion Association to offer the seat.
"We have some thinking to do in terms of whether a seat would fit with our strategy," said Botha. "But if we were to decide to participate, we believe we would be regarded as suitable candidates."
Standard Bank chaired the platinum fix, said Botha.
South African-owned Investec and the UK's Barclays were rumoured to be interested in bidding for a seat, which has become available on only two other occasions in the fixing's almost century-long history.
While Barclays Capital has confirmed its intention to bid, Investec said on Friday that it was "not looking at it at the moment".
"We don't see the value in it," said Paul Plewnan at Investec's commodities desk in London.
Plewnan said Investec might have been cited as a contender because of its interest two years ago when Credit Suisse First Boston pulled out of gold trading.
While the platinum fix is run on a telephone system, the gold fix members have met twice daily at 10.30am and 3pm at Rothschild's offices for the past 85 years.
One of the oldest rituals in the City of London, the gold fix meetings started just after World War 1. An exclusive club of pinstriped bankers, the gold fixing members are known for keeping up the bizarre tradition of signalling their agreement on a price by knocking over small Union Jacks in front of them. But with Rothschild's exit, all this may change.
The changing of guard might be an opportunity to modernise the fixing method, said Botha, who believed telephone fixing might be used in future.
Media reports out of London suggest that this is also an opportunity for the London Bullion Association to start rotating the chairmanship.
The Independent UK said it was likely that the Rothschild seat would go to a market making member of the association.
Those that qualify are AIG International, Barclays, JP Morgan, UBS and J Aron, which is owned by Goldman Sachs.
