China Construction Bank Becomes First Chinese Bank to Help Set Silver Price

By Ese Erheriene

China Construction Bank Corp. has become the first Chinese bank to participate in the London silver price fix, in a further demonstration of the country's footprint in global financial markets.

The addition to the panel of price participants comes amid unrest among silver market participants following a recent series of fixings that deviated from the spot price and cost some users thousands of dollars.

CCB, one of China's big-four state-owned lenders, will participate in the daily electronic auctions that set the LBMA Silver Price benchmark, CME Group Inc. said in a news release Monday. CME Group and Thomson Reuters Corp. co-administrate the silver fix.

The Chinese bank will join UBS AG, Bank of Nova Scotia, HSBC Holdings PLC, Toronto Dominion Bank and J.P. Morgan Chase & Co.

"CCB is delighted to be the first Chinese bank to become a participant in the Silver Price auction process in London," said Mr. Gu Yu, general manager of the financial markets department at CCB. "This further builds on our combined efforts to boost RMB liquidity and products in Europe."

The move is the latest in a series of steps taken by China to extend its reach in global financial markets, and will make it easier for companies and individuals to invest abroad.

The Asian giant had its currency, the yuan, declared an official reserve currency last November putting it on a par with global powerhouse currencies such as the dollar, the euro and the yen.

China is also playing a larger role in metals markets, although its efforts have been tainted by a scandal at a warehouse in the port city of Qingdao, in which banks allegedly pledged metal multiple times as collateral on loans. CCB, the nation's second-largest lender by assets, said in October it would buy a majority stake in British metal trading company Metdist Trading Limited.

"Every new participant is good news for a market," said Robin Bhar, head of metals research at Société Générale SA "Hopefully, we'll have other members from the region."

The silver fix went electronic in August 2014, after 117 years as a telephone-based system, after coming under scrutiny from regulators recently, as part of a wider probe into key financial benchmarks. The benchmark is used globally by firms, from miners to retailers, in the pricing of silver stock.

Write to Ese Erheriene at ese.erheriene@wsj.com

(END) Dow Jones Newswires

March 07, 2016 11:24 ET (16:24 GMT)

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