In what is being widely seen as a major step in globalizing the
Shanghai gold market, the People's Bank of China yesterday admitted
five major foreign banks as members of Shanghai Gold Exchange
(SGE).
The five banks are HSBC, Standard Chartered Bank, both from
Britain, UBS of Switzerland, Bank of Nova Scotia of Canada and
France's Societe Generale.
The central bank is also reported to be considering plans to
loosen the restrictions on gold imports and exports.
Opening SGE membership to foreign banks is expected to increase
the liquidity of the domestic gold market and bring in foreign
expertise that can promote the healthy development of the market in
the long run. The move could also lead to greater interaction with
the international market, leading to greater convergence of
prices.
Roland Wang, general manager of World Gold Council, Greater
China, said: "It's a natural trend for China to gradually merge
with the international market. A closer tie between China's gold
market and the international market would be established,
increasing China's importance in gold price discovery in the
international market."
Richard Yorke, president and CEO of HSBC Bank (China), said:
"SGE membership will enable us to share our international
experiences and expand our participation in China's financial
markets. We hope membership of the exchange will offer us trading
opportunities and enable us to broaden our services.
"This is another exciting development in China's financial
markets and HSBC China is pleased to remain at the forefront of
this new market development."
Cai Zhenwei, director of the gold business department of Bank of
China, told China Daily: "The entry of major foreign banks
will help attract more investors to the gold market. The market
will benefit from the increase in liquidity."
Despite the anticipated increase in competition with the entry
of foreign banks, SGE's members remain positive.
"The foreign banks, with more expertise and experience in
trading in the international market, can bring new ideas," said
Zhang Wei, director of the gold business department with Shanghai
Bank.
Nearly all major domestic banks, including Bank of China and
Shanghai Bank, are members of SGE.
(China Daily June 8, 2007)