The soon-to-be launched Hong Kong Mercantile Exchange, which cost HK$500 million and took three years to establish, is to introduce yuan-denominated gold products by the end of this year after the US dollar-gold contracts start trading next week, says chairman Barry Cheung Chun-yuen.
Delayed for more than two years originally scheduled, HKMEx was finally granted the approval by the Securities and Futures Commission (SFC) last week and will start trading on May 18 for US dollar-gold futures contracts for physical delivery in Hong Kong.
Investors can pay a minimum deposit of US$1,600 to one of the 16 broker members and trade future contracts via an electronic system.
The minimum investment for each lot is 32 troy ounces. Based on today's gold price of about US$1,400 per ounce, the value would be about US$45,000. Investors would also have to pay 50 US cents per contract and 25 US cents for a clearing fee.
Cheung said he wanted later to introduce another product with the quoted price in yuan but settled in US dollars. He hoped to gain approval for this by the year end. He also wanted the exchange to trade in silver and other precious metals but no timetable had been set for this.
Cheung, a veteran oil executive, announced the plan to set up the exchange at a press conference in mid-2008 during which a video was shown of Financial Secretary John Tsang Chun-wah giving his blessing to the commodities project, even though the SFC had not yet granted its licence.
