Hong Kong has commenced trial operations for a new central clearing and settlement system to support local gold trading.
Operating under the government-owned Hong Kong Precious Metals Central Clearing Company (HKPMCC), this infrastructure provides services for bilateral and over-the-counter (OTC) gold transactions.
Bank of China (Hong Kong) serves as the designated vault and settlement institution. To facilitate physical gold deposits and withdrawals, a central ledger records settlement activities and gold transfers.
Balances are held on an unallocated basis for commingled holdings of 400-ounce bars meeting international standards.
According to the Financial Services and the Treasury Bureau (FSTB), initial gold batches have been deposited and the first settlement activities are complete.
Eleven participating banks, alongside regulators and the Shanghai Gold Exchange, sit on the HKPMCC board to provide market feedback.
“Commencing the trial operation of the gold central clearing and settlement system marks a significant step forward in developing Hong Kong’s gold trading infrastructure,”
said Paul Chan, Financial Secretary of Hong Kong.
Officials plan to connect this clearing system to the local Real Time Gross Settlement (RTGS) network.
Doing so will enable Delivery versus Payment (DvP) settlement, reducing risks by bridging physical delivery with cash clearing.
Enhancing Hong Kong gold trading via cross-border links
Alongside the clearing platform, HKPMCC launched the initial phase of Delivery Connect with the Shanghai Gold Exchange.
Market participants can now deposit physical gold into the Shanghai Gold Exchange International Board’s vault in Hong Kong, as HKPMCC has applied to become an international member and opened a physical gold account.
Industrial and Commercial Bank of China (Asia), HSBC, and Bank of China (Hong Kong) completed the first two-way transfers under this arrangement today.
To improve price discovery during Asian trading hours, a new HAU price ticker has launched in partnership with Bloomberg.
It reflects indicative bid and offer prices from local market participants and is available on both Bloomberg and London Stock Exchange Group platforms.
Expanded financial products and infrastructure
Initiatives targeting financial products and market infrastructure support the launch.
Hong Kong Exchanges and Clearing (HKEX) has revitalised its USD gold futures contract and is exploring a new RMB gold futures contract. The proposed contract would feature delivery support from Shanghai.
Following the recent listing of three additional gold ETFs, the market total has increased to six. The Mandatory Provident Fund Schemes Authority plans to optimise its approval mechanism.
This adjustment aims to make it easier for funds to invest in gold ETFs.
Furthermore, policymakers are evaluating tax incentives for institutions conducting gold settlement in Hong Kong.
Authorities are also coordinating with the Insurance Authority to establish a dedicated specie insurance hotline by July 2026, while working with the Airport Authority to expand local gold storage capacity to over 2,000 tonnes within three years.
Featured image credit: Edited by Fintech News Hong Kong, based on image by Gov of Hong Kong
