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Gold, futures industry curbs relaxed

(Shenzhen Daily/Agencies)
Updated: 2007-03-20 15:49

The government will gradually relax controls over the import and export of gold and allow more foreign access to domestic futures markets, according to a lengthy central bank announcement of new financial reforms.

The government has revamped its futures regulations to allow foreign institutions to participate in financial futures, the first of which - stock index futures - were supposed to have been launched earlier this year. Currency futures are also in the works.

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The new regulations, which will take effect April 15, no longer prohibit financial institutions from conducting, raising funds for or offering securities for futures trading.

Domestic banks and firms also face more risk since the government in July 2005 abandoned a decade-long peg to the U.S. dollar and pledged to manage the yuan against a basket of currencies.

The government currently forbids the export of gold bars and limits imports to the big four State-owned banks and a few other firms. There is an active trade in importing gold to manufacture jewelry for re-export.

The central bank called for the government to develop gold futures and options, which China currently lacks. TheShanghaiGold Exchange only trades spot gold.

Foreign banks will be allowed to participate in gold trading, the central bank said in the announcement Friday. Six foreign financial institutions have applied to become members of the Shanghai Gold Exchange, domestic media said last month.

Banks in China already trade gold domestically to hedge against their currency positions, and have offered gold as an investment tool to wealthy depositors.Bank of Chinamay trade gold overseas without restriction.