London Fix Forex, also known as the London Gold Fix, is a daily benchmark rate that is set by a group of five banks in London. The rate is used to determine the price of gold and silver in the global market. The London Fix Forex is a crucial benchmark rate for traders and investors who deal with gold and silver.
The London Fix Forex is set twice a day, at 10:30am and 3:00pm London time. The five banks that are responsible for setting the benchmark rate are Barclays, HSBC, Societe Generale, Bank of Nova Scotia, and Deutsche Bank. These banks are also known as market makers, as they are responsible for buying and selling gold and silver on behalf of their clients.
The London Fix Forex was first introduced in 1919 by the London Gold Market Fixing Ltd. The purpose of the benchmark rate was to provide a fair and transparent pricing mechanism for gold and silver. The London Fix Forex quickly became the standard benchmark rate for gold and silver, and it is still widely used today.
The London Fix Forex is calculated by taking the average price of gold and silver over a 30-minute period, based on the trades conducted by the five market makers. The benchmark rate is then announced to the market, and it is used to determine the price of gold and silver for the rest of the day.
The London Fix Forex is important for a number of reasons. Firstly, it provides a fair and transparent pricing mechanism for gold and silver. This ensures that traders and investors can buy and sell these precious metals at a fair price. Secondly, the London Fix Forex is used as a benchmark rate by other financial institutions, such as ETFs and mutual funds. These institutions use the benchmark rate to value their gold and silver holdings.
The London Fix Forex is also important because it provides a reference point for other gold and silver markets around the world. For example, the New York Mercantile Exchange (NYMEX) uses the London Fix Forex as a reference point for its gold and silver futures contracts. This ensures that the price of gold and silver is consistent across different markets.
The London Fix Forex has come under scrutiny in recent years due to allegations of price manipulation. In 2014, regulators in the UK and US fined Barclays, HSBC, and Deutsche Bank for their involvement in manipulating the benchmark rate. The banks were accused of colluding to manipulate the price of gold and silver, in order to benefit their own trading positions.
The allegations of price manipulation have raised concerns about the integrity of the London Fix Forex. Regulators have since introduced new rules and regulations to ensure that the benchmark rate is set in a fair and transparent manner. For example, the banks that are responsible for setting the benchmark rate are now required to publish the trades that they conduct during the 30-minute period.
In conclusion, the London Fix Forex is a crucial benchmark rate for traders and investors who deal with gold and silver. The benchmark rate provides a fair and transparent pricing mechanism for these precious metals, and it is used as a reference point by other financial institutions around the world. Despite allegations of price manipulation, the London Fix Forex remains an important benchmark rate for the global gold and silver markets.
