(Yicai) July 8 -- Hong Kong's central gold clearing and settlement system officially began trial operations yesterday, along with a set of targeted initiatives to build a modern and full-chain gold trading ecosystem.

The system aims to provide efficient and reliable clearing and settlement services for bilateral and over-the-counter gold transactions and address the long-standing absence of a unified central clearing mechanism in Hong Kong's precious metals market, helping to improve trading efficiency, reduce counterpart risks, and enhance overall market stability.

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

"Along with a series of measures to promote physical delivery, develop investment and derivative products as well as risk management tools, provide tax concessions, and deepen connectivity with the mainland gold market, we are committed to building a thriving gold trading ecosystem," Chan noted. "This will further enhance the richness, depth, and breadth of our financial markets, create new investment opportunities for local and overseas investors, and inject new momentum into the development of the financial sector." 

On the basis of the cooperation agreement signed in January, the Hong Kong Financial Services and the Treasury Bureau and the Shanghai Gold Exchange launched the initial phase of the Delivery Connect yesterday.

Under this initiative, Hong Kong Precious Metals Central Clearing applied to become an international member of the SGE and opened a physical gold account. Market participants can choose to deposit their physical gold holdings into the designated vault of the SGE International Board in Hong Kong through this account.

Through two-way transfer, market participants can participate in both the on-exchange market of the SGE and the over-the-counter market of Hong Kong. This will facilitate the flow of physical gold between the HKPMCC and the SGE systems, effectively connecting the gold markets of Hong Kong and Shanghai, and achieving mutual benefit and win-win outcomes. 

Late yesterday, Bank of China, Bank of Communications, China Construction Bank, and other major lenders disclosed the details of their transactions and settlements completed during the first day of trial operations.

BOC said that its domestic and overseas institutions jointly assisted dozens of market participants, including leading enterprises and financial institutions from the entire precious metals industry chain, in completing the first batch of transactions under the Shanghai-Hong Kong Delivery Connect yesterday.

BOCOM completed the settlement of 76,000 ounces of gold transactions worth USD315 million with multiple financial institutions yesterday, the lender said. The transaction types included spot, forward, and swap deals, with trading currencies covering Hong Kong gold against the offshore Chinese yuan, Hong Kong dollar, US dollar, and euro.

CCB completed the physical storage of Hong Kong gold yesterday, achieving a total of 16 physical gold transactions and settlements, the bank noted.

Editors: Tang Shihua, Futura Costaglione