Gold exchange considers derivatives trading
(Shanghai Daily)Updated: 2007-06-07 16:09 Shanghai Gold Exchange, which already offers spot trading, wants to trade gold and silver futures as it aims to offer investors the option of derivatives trading, its chairman said yesterday.
The bourse, China's sole gold exchange, has already gained approval from the People's Bank of China, the central bank, to trade gold and silver futures, Shen Xiangrong, chairman of the exchange, said at its members' meeting in the city.
Shen said once the central bank approves the rules governing futures trading and risk management of the two metals, the gold exchange will officially submit an application to the China Securities Regulatory Commission(CSRC), which is the watchdog for securities and futures trading.
"The introduction of futures products on the gold exchange is a must for the bourse as it moves to offer investors the option of derivatives trading," said Shen.
He said the move to futures trading will be a milestone, as central bank Governor Zhou Xiaochuan has pointed out.
The bourse has already completed testing the trading system for futures and has trained staff on derivatives trading as it prepares for the move, and has already discussed the issue with the CSRC.
Gold trading is under the supervision of the central bank while futures trading comes under CSRC's purview.
The pending rules on futures trading supervision offer a good opportunity for the gold exchange to collaborate with other futures bourses and institutions that gain approval from the futures regulator.
The gold exchange also didn't rule out the possibility of teaming up with the futures exchange to trade gold futures, Shen said. Market speculation has been swirling that the Shanghai Futures Exchange is also interested to introduce gold futures trading.
The gold bourse has also done research on gold bonds, gold exchange-traded fund, precious metals index futures and gold buy-back as possible product offerings, said Wang Zhe, president of the gold exchange.
The exchange is already conducting gold spot and forward trading. The bourse also plans to add five overseas banking members for a trading list and has been in talks with HSBC and Scotiabank and UBS on membership.
Wang also said the bourse will team up with more commercial banks to trade gold for retail investors to add luster to the metal's investment appeal.
The Industrial and Commercial Bank of China, the country's biggest lender, has already started gold trading for individual investors on the gold exchange.
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