Hong Kong's gold central clearing, settlement system commences trial operation

The Financial Services and the Treasury Bureau (FSTB) of the Hong Kong Special Administrative Region (HKSAR) government announced on Tuesday the commencement of the trial operation of Hong Kong's new central clearing and settlement system for gold, together with a suite of targeted initiatives aiming to build a modern and full-chain gold trading ecosystem.

In tandem with the commencement of the trial operation, the first batch of gold has been successfully deposited into the designated vault, and the first batch of trading and settlement activities has also been completed. Key market participants of the trial operation include banks and financial institutions, mining companies, refiners, jewelers, and others.

According to the FSTB, the targeted initiatives include rolling out the initial phase of delivery connect with the Shanghai Gold Exchange, launching a new HAU price ticker, expanding storage capacity and refining capability, diversifying gold investment products, exploring tax incentives, and establishing an industry-led trade association. These measures will collectively bolster Hong Kong's role as a trusted international gold trading, clearing, and reserve hub.

Paul Chan, financial secretary of the HKSAR government, said that the commencement of the trial operation of the gold central clearing and settlement system marks a significant step forward in developing Hong Kong's gold trading infrastructure.

Hong Kong is committed to building a thriving gold trading ecosystem, which will further enhance the richness, depth, and breadth of the city's financial markets, create new investment opportunities for local and overseas investors, and inject new momentum into the development of the financial sector, Chan added.

Operating under the governance of the Hong Kong Precious Metals Central Clearing Company Limited (HKPMCC), a wholly government-owned entity, the system provides clearing and settlement services for bilateral and over-the-counter gold transactions.

The board of directors of the HKPMCC comprises the HKSAR government, the Shanghai Gold Exchange, regulators, and 11 banks. Meanwhile, Bank of China (Hong Kong) Limited has been appointed as the settlement institution and designated vault of the system, operating under the oversight of the HKPMCC. ■