Shanghai launches its gold exchange

By WU YIYAO (China Daily) Updated: 2014-09-19 08:58

Aram Shishmanian, CEO of the World Gold Council, said the launch of Shanghai Gold, with increasing numbers of players from all over the world, will help China gain more say over the prices of the precious metal and add vitality to bullion trading.

The SGE said in a release that the FTZ international board now has more than 40 members, including Goldman Sachs, UBS, Australia & New Zealand Banking Group Ltd, HSBC Holdings Plc and Standard Chartered Plc, many of which are also members of LME and COMEX.

To separate onshore and inshore capital in order to stabilize capital flows and manage risk exposures, foreign investors will trade the gold in offshore yuan, while domestic traders will use the onshore yuan, the SGE said.

Renminbi may potentially replace the dollar in pricing commodities, as China is moving from a regional to international market, said Jeremy East, global head of metals trading at Standard Chartered.

Analysts said the success of Shanghai Gold will largely depend on how active the trading will become.

"The garnered liquidity of the new contracts, a gauge for market recognition of prices, and a strong domestic market will add to the advantages of Shanghai Gold," said Jiang Shu, an analyst with Industrial Bank, one of the few banks that are allowed to import gold into China.

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