Shanghai's Gold Exchange is pressing Beijing to allow foreign banks to become members, in an effort to make its fast-growing business more international and develop a greater range of financial products. Scotiabank, Commerzbank and Standard Bank of South Africa are among several foreign institutions that have applied to the People's Bank of China to join the 128-member exchange. 'We cannot operate independently of the world market and must work closely with it,' an exchange spokesman told the South China Morning Post at the weekend, adding that the exchange hoped approvals would be secured as soon as possible. Foreign bankers already serve as advisers to the exchange and see the opportunities there as comparable to those in Shanghai's foreign exchange market. In the first six months of this year, exchange turnover reached 430.6 tonnes, an increase of 49.1 per cent over the same period last year. Trading rose 59 per cent to 49.4 billion yuan. Since the end of last year, three of China's Big Four state banks have been allowed to invest on the exchange. Individuals were allowed to open exchange accounts in July. Trading, however, is restricted to the spot market and closed to foreign investors. The exchange wants to change this and also develop gold-linked financial products to tap into China's billions of yuan of individual and corporate savings. The exchange's model is Turkey, which opened the Istanbul Gold Exchange in 1995. Ten years on, Turkey is the world's third-largest gold jewellery market after India and the United States, and the world's third-largest manufacturer of gold jewellery. '[Mainland] regulators want to see gold changed from being a physical to a financial asset, which investors keep for the long term without holding the metal,' said Sunil Kashyap, Scotia Capital's managing director in Hong Kong. 'The examples to follow are Turkey, Malaysia and India. 'China now is where Turkey was in 1993. The change in Turkey has been fabulously successful, allowing the local jewellery business to prosper thanks to the easy availability of gold, hedging products and metal financing. Such a reform in China could take several years but would be faster than in Turkey.' The Istanbul exchange launched gold futures and options two years after it opened. In 1999, it expanded into other precious metals, with spot silver and platinum markets. With higher gold output and a far higher level of bank savings, the Shanghai exchange should be well placed to challenge its Turkish rival. The China Gold Association says China's gold output increased 11.75 per cent last year to a record 212.35 tonnes, making it the world's fourth-largest producer. According to the World Gold Council, consumer demand for gold in China last year grew 12.8 per cent to 234 tonnes, also fourth globally after India, the United States and Turkey.