By Jan Harvey and Peter Hobson
LONDON (Reuters) - ICE Benchmark Administration, a unit of Intercontinental Exchange, was confirmed on Friday as the new operator of the London Bullion Market Association silver benchmark.
The LBMA said it expected IBA to take over the LBMA Silver Price in autumn this year, confirming a Reuters report.
A race to provide the auction process that sets the benchmark, for which the LBMA owns the intellectual property rights, narrowed to two potential providers, ICE and the London Metal Exchange, earlier this year.
ICE is the operator of the LBMA Gold Price benchmark, which is set via an electronic auction. The exchange introduced clearing of business transacted during the auction in April.
For silver, ICE offered a model with clearing, while the LME proposed a flexible auction process.
"Our centrally cleared model has already enabled broader participation and we continue to expand the gold auction. We anticipate this will support expanded participation in silver as well," IBA President Finbarr Hutcheson said in a statement.
Ross Norman, chief executive of bullion dealer Sharps Pixley, described IBA as "a solid and safe choice".
"They've demonstrated that they can manage the job well," Norman said.
The LBMA said in March that the current incumbents, CME Group (NASDAQ:CME) and Thomson Reuters, were stepping down from providing the auction process less than three years after they successfully bid to provide it.
The benchmark is used by silver producers and consumers globally to price contracts.
Its previous incarnation, the 117-year-old London silver "fix", ended in 2014 after its operators said they would stop running the telephone-based auction.
The new electronic benchmark has been plagued in the past by big swings away from the underlying spot price, which traders have attributed to a lack of liquidity and an unwillingness on the part of the banks taking part in the auction to adjust orders once the process has started.
The gold benchmark also experienced large, unpredictable fluctuations after some banks left the auction in April following the introduction of clearing.