The Hong Kong Gold Central Clearing and Settlement System officially starts trial operation, building a modern gold trading ecosystem.

The Hong Kong Treasury Bureau announced today (July 7) that the new Hong Kong Gold Central Clearing and Settlement System has officially started trial operation. A series of precise supporting measures have also been introduced simultaneously to establish a modern and comprehensive gold trading ecosystem. These measures include the launch of the first phase of "Physical Link" with the Shanghai Gold Exchange, the introduction of the new "HAU" price code, expansion of storage capacity and refining capacity, enrichment of gold investment products, research on tax incentives, coordination of insurance arrangements, increasing flexibility in Mandatory Provident Fund (Trillions of MPF) investments in gold exchange-traded funds (ETFs), and the establishment of an industry-led association. These measures will collectively enhance Hong Kong's role as a trusted international gold trading, clearing, and reserve hub. Paul Chan Mo-po, the Financial Secretary of Hong Kong, said, "The National '15th Five-Year Plan' explicitly supports Hong Kong in building a commodity trading ecosystem. The commencement of trial operation of the Hong Kong Gold Central Clearing and Settlement System today is an important step in developing Hong Kong's gold trading infrastructure. In coordination with a series of measures to promote physical delivery, develop investment products, derivative products, and risk management tools, provide tax incentives, and deepen connectivity with the mainland gold market, we are committed to building a vibrant gold trading ecosystem and further enhancing the substance, depth, and breadth of our financial market, creating new investment opportunities for domestic and foreign investors, and injecting new momentum into the financial industry." The Secretary for Treasury of Hong Kong, Wesley Wan, stated, "The trial operation of the Hong Kong Gold Central Clearing and Settlement System is supported by a comprehensive set of supporting measures. Our vision is to establish a scalable unified platform that attracts global participants through efficient and reliable clearing and settlement services for bilateral and over-the-counter gold trading." Highlights of the system include: - Operation governed by comprehensive Clearing Rules defining the rights, responsibilities, rules, and procedures of all participating banks and designated warehouses. - Central ledger to record settlement activities, gold transfers, and balances of participating banks, seamlessly interfacing with designated warehouses for the facilitation and recording of physical gold deposits and withdrawals. - Gold balances within the system are held and settled in undifferentiated form, ensuring efficient settlement between participants through internationally accepted pooled holding arrangements requiring gold eligible for settlement to meet international standards, such as 400 troy ounce bars. - The Board of Directors of the Hong Kong Clearing Company comprises members from the Hong Kong government, the Shanghai Gold Exchange, regulatory agencies, and 11 banks, to solicit market opinions. Additionally, Bank Of China (Hong Kong) Limited has been appointed as the settlement agent and designated warehouse operator for the system, operating under the supervision of the Hong Kong Clearing Company. As the trial operation commences, the first batch of gold has been successfully deposited in the designated warehouses, and initial trade and settlement activities have been completed. The trial operation has received strong support from major market participants, including banks and financial institutions, mining companies, refineries, jewelers, and institutional participants. The list of major market participants participating in the trial operation is attached. The Hong Kong Clearing Company will continue to closely monitor the trial operation of the system and strive to enhance the system before formal operation to provide maximum convenience to market participants. The system will also integrate with the Real-Time Gross Settlement system to achieve "delivery versus payment" settlement, leveraging Hong Kong's world-class fund clearing and settlement capabilities to seamlessly connect gold trading and physical delivery, further reducing settlement risks and improving overall operational efficiency. Several supporting measures have been introduced in conjunction with the launch of the Central Gold Clearing and Settlement System, demonstrating the Hong Kong government's determination to comprehensively promote a modern, interconnected, and internationally competitive gold trading ecosystem. These measures include: 1. Collaborating with the Shanghai Gold Exchange to launch the first phase of "Physical Link" 2. Introducing the new "HAU" price code 3. Expanding storage capacity and enhancing refining capacity 4. Enriching gold investment products 5. Researching tax incentives 6. Coordinating insurance arrangements 7. Increasing flexibility for Trillions of MPF investments in gold ETFs 8. Establishing an industry-led association By strengthening infrastructure, enhancing connectivity, and introducing precise supporting measures for various aspects of the industry chain, Hong Kong is well-positioned to develop into a leading global hub for gold trading, clearing, and reserves.