* Existing silver benchmark to cease on August 14
* Participants want more contributors, electronic system
* LBMA invites proposals from potential administrators
By Jan Harvey and Clara Denina
LONDON, June 5 (Reuters) - Silver market players are infavour of an electronic, auction-based system for setting abenchmark price with a broader base of contributors when the'fix' ceases in August, the London Bullion Market Association(LBMA) said on Thursday.
The LBMA has been consulting market participants on apotential replacement for the daily silver 'fix' since itsoperator said in May it would stop administering the117-year-old process.
HSBC, Deutsche Bank and Scotiabank currently set the price once a day via a conferencecall.
Citing the results of a survey, which attracted 440participants, the LBMA said: "The general consensus was that thesilver pricing mechanism should be an electronic, auction-basedsolution. The solution must be tradeable, with an increasednumber of direct participants."
LBMA Chief Executive Ruth Crowell said the association hadlaunched a request for proposals from all companies who hadexpressed an interest in administering the silver pricebenchmark.
Members of the association, which include the current fixersand other large bullion-trading banks such as JPMorgan and UBS,would provide feedback on the proposals at a seminar on June 20,she said.
The Chicago Mercantile Exchange (CME) and the London MetalExchange (LME) both said last Thursday they were working withthe LBMA and the industry to find an electronic-based solution.
Industry sources said commodity price benchmarks providerPlatts and news agency Thomson Reuters arealso in talks with the LBMA, while ETF Securities told theFinancial Times on Wednesday that it was also interested insetting the benchmark.
A number of technology providers are investigating ways tooffer a more transparent way of disseminating information thatshows how the price of the $3.5-billion-a-day silver trade issettled.
The move to disband the silver fix came after DeutscheBank, a member of the gold and silver fix for two decades,failed to attract a buyer after putting its seats up for sale inJanuary.
At the start of each fixing, the chairman announces anopening price to the other members, who relay this to theircustomers and, based on orders received, then instruct theirrepresentatives to declare themselves buyers or sellers at thatprice.
(Reporting by Jan Harvey; Editing by Veronica Brown and JasonNeely)