FSTB rolls out gold clearing pilot with Shanghai link

This forms part of a full-chain gold trading ecosystem.

The Financial Services and the Treasury Bureau (FSTB) has launched a trial gold central clearing and settlement system on 7 July as part of a broader plan to develop a full-chain gold trading ecosystem.

The bureau said in a statement that the measures include the initial phase of "Delivery Connect with the Shanghai Gold Exchange" and a new HAU price ticker to provide a Hong Kong-specific reference rate.

The clearing and settlement system operates under the Hong Kong Precious Metals Central Clearing Company, a wholly government-owned entity that provides clearing and settlement services for bilateral and over-the-counter gold transactions.

The system operates under a Clearing Rulebook and includes a central ledger to record settlements, gold transfers, and participating banks' balances, whilst connecting with designated vaults to record physical gold deposits and withdrawals.

Gold balances are managed and settled on an unallocated basis, with commingled holdings supporting settlement for gold that meets international standards.

Eligible gold comprises approximately 400 fine troy ounce bars that conform to international standards.

FSTB also outlined plans to expand gold storage and refining capacity, diversify gold investment products, explore tax incentives, co-ordinate insurance arrangements, increase the flexibility of Mandatory Provident Fund investments in gold exchange-traded funds, and establish an industry-led trade association.

Financial Secretary Paul Chan said the initiative supports Hong Kong's role under China's 15th Five-Year Plan.

"The commencement of the trial operation of the gold central clearing and settlement system today marks a significant step forward in developing Hong Kong's gold trading infrastructure," Chan said.

He added that the measures would strengthen Hong Kong's financial markets, expand investment opportunities for local and overseas investors, and support the development of the financial sector.

Secretary for FSTB Christopher Hui said the government aims to build "a scalable and integrated platform with trusted capabilities in clearing, connectivity, price discovery, risk management, storage, and insurance for global participants."