Hong Kong has completed a pilot test that uses tokenized bank deposits to settle gold trades within minutes — a step aimed at advancing a city goal, set out in its first five-year plan, of becoming an international gold-trading center.
China CITIC Bank International (CNCBI) and the Hong Kong Gold Exchange (HKGX) announced at Hong Kong FinTech Week on Monday that they had completed a “delivery versus payment” (DvP) pilot test in gold exchanges.
CNCBI’s tokenization platform is connected to the Hong Kong Monetary Authority’s Project Ensemble, and the tests covered both intrabank settlement and interbank transfers.
Executives said settlements in the test took five minutes or less, far faster than conventional arrangements, which can take days.
The official launch of the tokenized deposits in gold trading will take place in 2027.
With gold trading as its entry point, the bank, HKGX’s sole cooperator in this initiative, provides “a more efficient and reliable settlement solution”, according to Wendy Yuen Miu-ling, head of CNCBI’s personal and business banking group.
The tokenized-deposits pilot program in gold trading will “reinforce the international financial hub’s competitiveness” through “T+0”, or real-time settlement, she said.
HKGX Chairman Haywood Cheung Tak-hay said: “More stable settlement arrangements inspire greater confidence in market participants. More diverse settlement options contribute to a more vibrant market environment.”
Yuen said the service will run alongside traditional deposit settlements. HKGX CEO Brian Fung Wei-lung said tokenized deposits, built on distributed ledger technology, will support around-the-clock settlements, while DvP will reduce the risk of one side failing to deliver.
“Smart contracts could execute settlement automatically once pre-agreed conditions are met, and the technology could later be applied to fund trading and other assets,” Yuen said.
The project is closely tied to national and local policy. Hong Kong’s first five-year plan, unveiled by Chief Executive John Lee Ka-chiu on Sept 16, covers 2026 through 2030 and is aligned with the national 15th Five-Year Plan (2026-30). The national plan includes explicit support for the city’s building a commodities-trading ecosystem, and developing the gold market is the city’s new push to broaden its financial sector.
Cheung said faster settlement could raise trading volumes and liquidity two- to threefold, and as much as tenfold for members in the future.
Fung said the system could also ease the settlement of nonstandard physical products, such as odd lots of varying purity, and cut financing costs incurred while trades wait to settle.
Cheung said the exchange’s system will run in parallel with the government’s central gold clearing and settlement system, which began trial operations in July and is due to launch formally in the first quarter of 2027.
Hong Kong should draw on “one country, two systems” to connect the mainland with international markets, he added.
HKGX is Hong Kong’s sole spot gold and silver exchange. It succeeded the Chinese Gold and Silver Exchange Society, whose origins date back to 1910, on Jan 1, 2025.
In February, HKGX announced a partnership with AGTech, an Alibaba Group member, to build a trading platform, a clearing and settlement system, and a digital commodity blockchain.
Contact the writer at jessicachen@chinadailyhk.com
