Shanghai Gold Exchange said trades will be cleared and delivered under the auspices of the China Foreign Exchange Trading System, a subsidiary of China's central bank.
BEIJING(BullionStreet): Three months behind schedule,China would finally launch interbank trading with gold contracts on Monday that will help more market forces to influence the countries commodities exchange.
The move will enable traders to swap bullion in larger amounts and heighten the appeal of the metal as an alternative investment class.
Shanghai Gold Exchange said trades will be cleared and delivered under the auspices of the China Foreign Exchange Trading System, a subsidiary of China’s central bank.
The move is also part of the broader financial reforms that Beijing has launched in recent weeks, loosening some of the restrictions on securities investment and allowing banks to price loans at cheaper rates than in the past, that seek to grant market forces a bigger role in both the economy and the capital market.
Marking a further opening in China’s gold market, the new trading system is of particular benefit for mainland institutions that trade bullion in large volumes.
China currently ranks as the world largest bullion market, accounting for a quarter of global demand.
However, the current trading platform relies on matching individual buyers and sellers, with a single trade limited to the equivalent of 2 to 3 kilos worth of gold, according to industry experts.