HSBC receives approval to trade on gold market

HSBC China has been given approval by the People's Bank of China to trade on the domestic gold market.

'HSBC is pleased to be among the first foreign banks to be granted Shanghai Gold Exchange membership,' said Richard Yorke, chief executive of HSBC China.

'Our membership will enable us to share our international experiences and expand our participation in China's financial markets.'

The news supports yesterday's reports in the mainland press that Wang Yuzuo, head of the central bank's foreign currency and gold markets department, had confirmed the successful applications of five international banks to join the exchange.

The other banks are reportedly UBS of Switzerland, Societe Generale of France, Canada's Bank of Nova Scotia and South Africa's Standard Bank Group, who all lodged applications with the Shanghai Gold Exchange earlier this year

However, Shanghai Gold Exchange spokesman Tong Gang last night denied that official approval had been given.

'This news is not official,' he said. 'The final decision about the individual banks' applications has yet to be made.'

It is expected that the banks will trade on the exchange with quotas under the qualified foreign institutional investor scheme regulated by the China Banking Regulatory Commission.

Shan Xiangrong, the head of the Shanghai Gold Exchange, reportedly said on Wednesday that the gold market would not be completely open to foreign-invested banks and that a number of practical issues, including the means and amount of investment, were still to be decided.

'We are now working closely with PBOC and CBRC on the potential role of this membership,' Mr Yorke said.

The opening up of the domestic gold market to foreign institutions marks another step in the mainland's progress towards liberalising its financial sector which has been a bone of contention with the mainland's US and European trading partners and a key issue at the recent session of the Strategic Economic Dialogue in Washington.

The Shanghai Gold Exchange offers cash and cash-deferred contracts for gold, platinum and silver.