Hong Kong’s new gold central clearing and settlement system began a trial operation on Tuesday, marking the special administrative region’s latest effort to further strengthen its position as a global hub for international gold trading.
“The initial gold deposits and the first transaction settlements have been completed. They involve multiple banks, as well as their clients, including mining companies, refiners, jewelers and other investors,” Chief Executive John Lee Ka-chiu said at the Hong Kong FIC & Bond Connect Summit.
The system will create a solid foundation, allowing the SAR to take the next major step to build a comprehensive gold trading ecosystem, which “benefits a world of investors and institutional capital seeking safe-haven assets”, he said.
Designed to provide efficient and reliable clearing services for transactions of gold in compliance with international standards, the system is operated by Hong Kong Precious Metals Central Clearing Company Ltd -- a HKSAR government-owned entity. Its board includes representatives of the Shanghai Gold Exchange, regulatory bodies and 11 banks from the Chinese mainland and overseas.
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A new mechanism, dubbed Delivery Connect, was also launched on Tuesday, creating a channel linking Hong Kong’s clearing system with the SGE and allowing participants to use their gold holdings to settle transactions in both markets
“The initiative will effectively bridge the physical liquidity pools of both markets. Three banks are already participating in the initiative, and the two-way transfer will be completed today,” Lee said.
In collaboration with Bloomberg, a new gold price ticker, called HAU, has also been introduced for gold traded and settled in Hong Kong. The city is also considering the development of a new Renminbi gold futures contract, with delivery support from the SGE.
