* Silver fix to cease after Aug. 14
* Electronic alternative may be answer to silver "fix" loss
* Exchange-based solution possible
By Clara Denina and Jan Harvey
LONDON, May 14 (Reuters) - The collapse of London's historic silver price benchmark under regulatory pressure could soon result in an electronic alternative, with technology providers already checking ways to offer a transparent price setting mechanism.
A number of technology providers have been investigating ways to offer a more transparent way of disseminating information that shows how the price of the $3.5 billion a day silver trade is settled.
"We are working on an alternative proposal (to the silver fix) already," one technology provider said.
The silver "fix" is set once a day with banks getting together via telephone to agree a price, based on deals between their clients. It is used by producers, consumers and investors who use it to base contracts on.
But the process for setting silver and gold prices came into sharp regulatory focus after the Libor (London Interbank Offered Rate) rigging scandal exposed widespread interest-rate manipulation in 2013.
The 117-year old London silver price benchmark's operator delivered a surprise to customers on Wednesday, saying it would stop administering the process on Aug. 14.
The London Bullion Market Association (LBMA) said it had launched a consultation among market participants "to try and ensure that there is something that replaces the silver fix."
Sources close to the matter said that the London Metal Exchange (LME) would also be keen to provide the silver market with an alternative solution to the "fix".
The LME currently provides a clearing of over-the-counter silver forward rates in conjunction with London clearing house LCH.Clearnet. The contract is marked to market using the LBMA forward curve.
"We are always looking at ways to expand our product offering, and are ready to expand our range of price discovery and post-trade tools to further service the precious metals market," the LME said in a statement.
The LBMA said it will approach miners and users of the benchmarks, regulators and potential administrators requesting feedback.
One existing alternative to the benchmark could be the use of future contracts listed on U.S. exchanges like the CME and NYSE Liffe. The latter has a 1,000-ounce contract that attracts reasonable volumes. CME's main contract is 5,000 ounces.
CME was not immediately available to comment.
Additional reporting by Veronica Brown in London and Josephine Mason in New York. Editing by Veronica Brown and David Evans