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imageLONDON: The London Bullion Market Association (LBMA) has taken steps to help to preserve London's role as a major global gold trading centre by making its management more open and independent, documents seen by Reuters showed.

London currently dominates the global over-the-counter gold trade but is facing increasing competition from China. There are also more regulatory demands after scandals over attemps to rig interest rate and currency benchmarks. Several banks have run into trouble with regulators over misdemeanors in their precious metals trading business.

Greater regulatory scrutiny has already forced changes in how precious metals prices are set but more are expected to increase transparency of the London market, which can trace its roots as far back as the seventeenth century.

The pressure for change is increasing also because China, the metal's largest consumer and producer, is competing with London to increase market share as a price setter with a yuan-denominated gold benchmark.

Currently, the LBMA has a management committee made up of representatives from eight firms including six banks, which are also involved in the trading of bullion.

But a majority of members, including banks, refiners and dealers, voted on Wednesday to create an independent board of directors comprising two bank market makers and three LBMA members.

The LBMA's chief executive Ruth Crowell and two employees of the association would also be on the board.

"The new structure is congruent with new market conditions, so we will now have an independence and oversight governance that is needed," Sharps Pixley CEO Ross Norman told Reuters.

"The LBMA don't hide from the notion that the decision-making process currently can sometimes be slower than they would like and with a new board in place they will be able to push through and make quicker, better decisions," Norman said.

Bullion dealer Sharps Pixley is an ordinary member of the LBMA.

The need to make the $5 trillion a year over-the-counter market more transparent, profitable and liquid led the LBMA to formally ask exchanges and technology firms in October last year to bid for services such as a gold exchange or a clearing platform.

A decision on the winning bidder should be known in September.

The LBMA is the owner of the intellectual property of the gold and silver benchmarks, run by part of the Intercontinental Exchange and a CME/Thomson Reuters joint venture respectively. The LBMA will also take on ownership of platinum and palladium benchmarks, run by the London Metal Exchange.

The benchmarks are widely used by producers, consumers and investors to trade and value the metal. Gold and silver are among the eight major market benchmarks that are regulated by Britain's watchdog Financial Conduct Authority (FCA).

The LBMA said it would issue a statement later on Thursday.

Copyright Reuters, 2016

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