HSBC Bank (China) Co announced on Friday that it has been approved as a member of the Shanghai Futures Exchange, becoming the first overseas bank to engage in China’s gold futures market.
“China is an important producer, user and investor of gold. The access granted for China’s gold futures market is a welcome addition to our existing gold spot trading business with the Shanghai Gold Exchange, and reinforces HSBC’s leadership in the global precious metals market,” said David Liao, managing director and head of Global Markets at HSBC China.
“We look forward to playing a greater contributing role in the development of China’s fledgling gold market, where we see vast growth potential,” Liao added.
HSBC China was one of the first overseas banks to become a member of the Shanghai Gold Exchange in February 2008, and the first overseas bank to obtain approval to start gold trading in June 2008.
The approval “reflects the opening up of China’s futures market,” Wu Jian’gang, researcher at the CEIBS Lujiazui International Finance Research Center, told the Global Times on Sunday.
“Gold is not quite closely related to industrial production, so introduction of foreign companies would not create a big, unmanageable impact on China’s commodity market,” Wu noted.
Gold futures should be in tune with the foreign exchange reform and opening of the financial market, so it is appropriate to open the gold futures market first in the process of foreign exchange reform and yuan internationalization, he added.
“The country would intensify efforts in the futures market, including reducing rates and increasing the liquidity and diversity of investors and agents. The opening up of gold futures is just a start and in the future, not only institutions, but also advanced global technologies and experiences will be introduced,” said Wu.
China is the largest gold producer in the world, with the output increasing to a record high of 340.88 tons in 2010, data from China Gold Association shows.