Hong Kong today launched, on a trial basis, a gold central clearing and settlement system, along with targeted initiatives to build a modern, full-chain trading ecosystem.

Launching the measures, the Financial Services & the Treasury Bureau said they include rolling out the initial phase of "Delivery Connect with the Shanghai Gold Exchange", and a new HAU price ticker designed to furnish a specific reference rate tailored for Hong Kong.

There are plans to expand storage capacity and refining capabilities, diversify gold investment products, explore tax incentives, co-ordinate insurance arrangements, bolster the flexibility of Mandatory Provident Fund investments in gold exchange-traded funds, and institute an industry-led trade association.

Financial Secretary Paul Chan underscored that the National 15th Five-Year Plan incorporates explicit support for Hong Kong in establishing a commodity trading ecosystem.

“The commencement of the trial operation of the gold central clearing and settlement system today marks a significant step forward in developing Hong Kong's gold trading infrastructure,” he said.

Mr Chan also highlighted that the Government is committed to building a thriving gold trading ecosystem. “This will further enhance the richness, depth, and breadth of our financial markets, create new investment opportunities for local and overseas investors, and inject new momentum into the development of the financial sector.”

Secretary for Financial Services & the Treasury Christopher Hui said that the Government’s vision is to build a scalable and integrated platform with trusted capabilities in clearing, connectivity, price discovery, risk management, storage, and insurance for global participants.

Operating under the Hong Kong Precious Metals Central Clearing Company, a wholly government-owned entity, the system is geared towards delivering efficient and reliable clearing and settlement services for bilateral and over-the-counter gold transactions.

The operation is governed by a comprehensive Clearing Rulebook. A central ledger has been established to record settlement activities, gold transfers, and the balances of participating banks, and will interface seamlessly with designated vaults to facilitate and record physical gold deposits and withdrawals.

Meanwhile, gold balances within the system are managed and settled on an unallocated basis, with commingled holding enabling efficient settlement for gold meeting international standards.

Eligible gold for settlement comprises about 400 fine troy ounce bars conforming to international standards.