Monday, October 17, 2016

China's Shanghai Gold Exchange (SGE) initiates next step towards being a part in setting global gold prices

On Oct. 17 China's Shanghai Gold Exchange (SGE) announced they will be collaborating with other global markets to allow gold pricing in Yuan to be part of the price set for derivative contracts.

In his announcement on Monday, SGE Chairman Jiao Jinpu sought to initiate the next step for China to play a large role in setting the price for the precious metal that has long been under the control of London for more than a century.

Shanghai Gold Exchange Chairman Jiao Jinpu said on Monday that the bourse will collaborate with foreign exchanges and allow them to use its yuan-denominated gold price in developing derivatives products.  
"We would collaborate with various exchanges and authorise these external exchanges to start business outside China to use it as basis for development of derivatives products," Jiao told an industry conference through an interpreter.  
Jiao was referring to the Shanghai Gold Exchange's yuan-denominated gold benchmark, which it launched in April in an ambitious move to exert more control over pricing of the metal and influence in the global bullion market. - Economic Times.India Times
In addition to the SGE's goal of being a part of the global gold and derivative price determinations, the Singapore Bullion Market Association also reported on Monday their initiation of a joint study between themselves, the LBMA, and the Intercontinental Exchange Benchmark Association (IBA) on connecting the London gold price mechanism to Asia, where China and Singapore could then have a say in the pricing of precious metals in overnight trading rather than allow bullion banks and investors to hijack the markets when U.S. and European bourses are closed.
The Singapore Bullion Market Association, London Bullion Market Association and Intercontinental Exchange Benchmark Administration (IBA) will launch a joint feasibility study on the development of "LBMA pre-AM gold price at 2 pm Singapore time", Lim Hng Kiang, minister for trade and industry and deputy chairman of the Monetary Authority of Singapore, told an industry conference on Monday. 
The study "is an important first step towards establishing a U.S. dollar price discovery mechanism for gold during Asian business hours," said Lim. "When in place, it will facilitate the timely tracking of Asian demand and allow participants in Asia to settle their trades within the same business day." 
"We hope to make a reputable gold benchmark mechanism in London available to Asian users," the Singapore Bullion Market Association's chief executive, Albert Cheng, told Reuters. - Reuters


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