Gold exchange opens doors to foreign firms
The 102-year-old local gold bourse has signed up a Middle Eastern gold trading firm, the first of the overseas companies it is planning to recruit as non-voting members.
Chinese Gold and Silver Exchange Society president Haywood Cheung Tak-hay told the South China Morning Post in an exclusive interview that players around the globe would be allowed to join as non-voting members as the gold bourse beefs up its international exposure.
The exchange has 171 members who co-own it and have voting rights. Non-voting members do not have ownership or voting rights but will be allowed to trade on the exchange and use its gold storage facility at Hong Kong International Airport.
'We have signed up a gold player from Istanbul. This will mark a new chapter for the Chinese Gold and Silver Exchange Society,' Cheung said.
'We want to get more international firms to join as non-voting members so that they can use the Hong Kong gold market to trade gold.'
He would not identify the Istanbul trader but said he would do so later.
Cheung said he was also in talks about similar link-ups with gold traders in other countries in the Middle East, in Switzerland, the United States, Japan and India.
'Many of these international gold traders may not want to be a full member of the exchange, because some local market features may not suit their needs,' he said. 'For example, they may not be interested in trading in tael local gold in Hong Kong dollars.'
But these international firms might be interested in non-voting status, which would allow them to trade directly in the Hong Kong market in gold products denominated in US dollars, Hong Kong dollars and yuan.
They would also be allowed to use the physical delivery services provided by the local gold bourse, including the airport gold storage facilities to house physical gold for settlement or for export.
'Hong Kong is a good location for international players to trade gold and then export the precious metal from our airport storage facility,' Cheung said.
This is particularly important for big players eyeing the China market, he said.
'The mainland Chinese gold market hasn't yet opened up, but international players who want to get closer to mainland investors can come and trade on our bourse,' Cheung said.
'Traditionally, the Chinese Gold and Silver Exchange Society is mainly for local players, but with gold prices still rallying, it's time for us to go international.'
Gold prices reached a record of US$1,920.30 per ounce in September last year before falling back to about US$1,600 now. Cheung believes gold could still hit US$2,000 an ounce.